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Peru's Business and Investment Guide 2021 No part of this publication may be reproduced, distributed or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher.
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Edited by: Ernst & Young Consultores S. Civil de R.L Av. Víctor Andrés Belaunde 171 Urb. El Rosario - San Isidro Lima – Perú
Design and layout: Carlos Aspiros Photos: PromPerú This digital publication is possible due to the collaboration of data and information from ProInversión and the Ministry of Foreign Affairs.
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First digital edition: February 2021 Available at www.ey.com 5 Taxes 3
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Peru is one of the most important countries in Latin America. Its diverse characteristics include a variety of climates, a vast territorial expanse, significant natural resources, people with great skills and high academic standards, and a solid economic and industrial background. Today, Peru is considered one of the world's leading emerging markets, with a solid recent history of economic FORstability based on an uninterrupted average annual growth over this millennium until December 2019 of 4.6% of its Gross Domestic Product (GDP).
In response to the impact of the COVID-19 pandemic, Peru was one of the countries in the region, and indeed, in the world, to implement such a forceful response through economic stimulus packages equivalent to 20% of the GDP. The predicted growth in 2021 will exceed 10%, according to numbers from the country's most EWOimportant institutions. This Business and Investment Guide is a tool for foreign and national investors, providing key information on the country's current economic situation and the principal tax, legal, and labor issues, as well as on how to incorporate businesses in Peru, and general information on how to invest and do business in the country. It also contains a complete directory of Peruvian embassies and consulates abroad, as well as contacts of interest RDto investors. EY Peru: Challenges to achieve sustained growth
Peru is one of the countries in Latin America that region (3.6%), for emerging countries (6.0%) and stands out for its macroeconomic stability, which advanced economies (3.9%). As a result, Peru will is one of the nation's most important pillars of be one of the countries in the region, together competitiveness. Uninterrupted economic growth with Chile and Colombia, that will see its GDP over the past 20 years until 2019 has consistently return to pre COVID-19 levels in 2022. contributed to the improvement of infrastructure, development of human capital, the adoption of We firmly believe that Peru offers great Paulo Pantigoso new technologies and the standard of living of all opportunities for favorable investment, as well Velloso da Silveira Peruvians. Additionally, a policy of being open as an ideal business climate for investment. Country Managing to the international market through multiple Peru's economy is showing indicators of evident Partner EY Peru commercial agreements complements recovery in a number of sectors as a result Editor legislation that is favorable to private domestic of the accurate measures being executed and foreign investment. within a challenging and constantly changing environment. The recognition of Peru's solid economy is based on low inflation (at the close of 2020, it This new edition of the Peru´s Business and is 23 consecutive years of single digit inflation), Investment Guide provides the investor with international reserves equivalent to 38% of GDP, a current key information on Peru's economic, controlled fiscal deficit (an average of 2.5% of GDP legal, tax, labor and financial issues, as well over the past five years, and an estimated 8.9% at as other information that can be used as a the close of 2020), and public debt that is estimated consultation tool for developing activities and to not exceed 36% of GDP at the close of 2020, well making business decisions. below the average of the rest of emerging countries in the world (63.1%) and in the region (81.5%). If you are a foreign investor interested in Additionally, 2020 closes with an estimated trade investing in Peru, you are also welcome to surplus of more than USD7.7 billion. approach the Peruvian diplomatic or consular mission nearest you, listed at the end of This situation permitted one of the region's major this Guide. responses to the effects of COVID-19, with fiscal measures equivalent to 20% of GDP that will bolster At EY we reaffirm our commitment to the a rapid recovery of economic growth estimated to development of Peru, as well as to the building be more than 10% of the GDP for 2021, according of a better world for business. We invite you to to forecasts by the Central Reserve Bank of Peru read this Guide in the hope that it will be of use (BCRP) and the Ministry of Economy and Finance. to discover new initiatives, and we are at your These forecasts are way above the average for the disposal for any assistance you may require. Words from the Minister of Foreign Affairs of Peru Peruvian Ministry of Foreign Affairs
In recent months, Peru has taken significant steps Analysts have noted that Peru’s reputation has to alleviate the public health and economic impacts grown even stronger in international markets thanks caused by the COVID-19 pandemic. Together, the to these historic issues, a scenario that is sure to government’s public policies, the country’s solid attract even more foreign capital for investment in macroeconomic fundamentals, the private sector’s the Peruvian economy and higher levels of activity, adaptability and creativity, and the hard work of the growth, and employment. general public have made sure that Peru continues Elizabeth to be an attractive destination for investors. In 2021, The Ministry of Foreign Affairs plays a strategic role in Astete Rodríguez our economy is expected to grow by more than 10%, all of this, helping to promote a portfolio of prioritized Minister of with an outlook that remains highly encouraging in national projects and attract foreign investment with Foreign Affairs the coming years. a view to leveraging our economic recovery.
In spite of the current situation, investors continue In its efforts to achieve this, the Ministry of Foreign to trust in Peru’s macroeconomic strengths, thanks Affairs has a significant competitive advantage: to its proven fiscal solvency, its vast international its diplomatic missions across the globe are active reserves that guarantee liquidity in the foreign agents in identifying markets and investment flows, exchange market, the country’s integration with world and in promoting our country’s economic interests, markets, and its excellent economic and regulatory with an expert knowledge of their local areas management. As a result, J.P. Morgan calculated and public and private sector contacts at the Peru’s country risk, according to the EMBIG index, at highest levels. 143 basis points as of the close of 2020, the lowest in the region. Additionally, the Ministry strives to develop and bolster strategic alliances with leading public and Despite the economic impact of the COVID-19 private entities as part of its efforts to reactivate our pandemic and the political instability experienced economy. The Peru's Business and Investment Guide toward the end of last year, Peru joined the select 2021 is, in fact, the product of one such partnership: group of economies that have issued hundred-year the bond between the Ministry of Foreign Affairs and bonds in dollars with low interest rates, offering EY Peru, to whom we are once again grateful for a clear sign of the global financial community’s their valuable collaboration in helping to share and confidence. promote our country’s strengths and opportunities. Words from the Director General of Economic Promotion Peruvian Ministry of Foreign Affairs
The public health and economic crises we are The Ministry of Foreign Affairs also has a network now facing present new opportunities and new of decentralized offices across Peru, providing it challenges for Peru and international investors with another excellent advantage. These offices seeking to maximize returns on their available work closely with regional governments and public financial resources. With this in mind, the Peruvian and private institutions in their respective localities, government -acting through the Ministry of thus acting as “feelers” to identify investment Foreign Affairs- has been working closely with the opportunities in regional projects, in coordination Eduardo relevant domestic public and private sectors to with our foreign missions. Chávarri García attract investments in prioritized segments such as Director General infrastructure and mining, among many others. Given the Ministry's global vision and its of Economic specialization in managing foreign relations, it has Promotion Through its missions abroad, the Ministry of Foreign the specialized skills needed to ensure a strategic Affairs aims to expand the market for Peruvian approach in the promotion and attraction of goods and to attract foreign investment that will foreign investment and in boosting Peruvian bolster our infrastructure and industries. We are investment abroad. working hard to maintain Peru's presence and strengthen its image among the international The work of the Ministry of Foreign Affairs includes business community by sharing business facilitating and participating in the negotiation of success stories and proving that, in spite of investment promotion and protection agreements the pandemic, our economy offers high-yield (IPPAs), investment chapters in free trade investment opportunities. agreements and double taxation and tax evasion prevention agreements (DTAs) in an effort to attract In its efforts to achieve this, the Ministry has a more investments to our country by guaranteeing significant competitive advantage: its diplomatic legal stability and certainty. missions across the globe, which work intensively to identify interest among potential investors in To successfully play this role, the Ministry of Foreign their area, also conduct prospective studies in Affairs has developed close ties with the most regions that are considered “non-traditional” but important public and private sectors, as well as EY which may become new sources of investment in a Peru, thus allowing us to present this digital version rapidly evolving world. Our foreign missions thus of the “Peru's Business and Investment Guide become active agents of promotion, with an expert 2021” I invite you to read on and learn about the knowledge of their local jurisdictions and contacts valuable opportunities Peru has to offer. at the highest levels. Words from the Executive Director of ProInversión
Peru has been one of the economies with greatest Peru will be one of the Latin American countries growth in the region over the past two decades, that manages to return to pre-COVID-19 levels by maintaining stable macroeconomic policies that 2022, as foreseen in the 2021-2024 Multiannual have allowed it to promote private investment and Macroeconomic Framework, and by 2021 the drive growth of the internal market, developing Ministry of Economy and Finance (MEF) has at the same time a clear policy of integration with estimated a 10% growth in GDP. international markets. Rafael Ugaz The good prospects of the Peruvian economy Executive Director The good performance of the Peruvian economy are based principally on the momentum of the Peruvian Private is widely recognized, not only by credit rating construction business and related industries, Investment agencies, which forecast a stable scenario for the which sustain a dynamic growth in investment Promotion Agency country despite the current situation, but also by thanks to the development of large infrastructure the leading institutional investors that maintain an projects granted in recent years. Added to this, appetite for Peru's sovereign bonds. This reflects is the Peruvian government's focus to boost the confidence in the future good management of development of projects through the National the economy and the evolution of the principal Infrastructure Plan for Competitiveness (PNIC) economic indicators. which prioritizes 52 projects for an investment in the order of USD30 billion, which means that more Peru's macroeconomic strengths - low levels of than 60% will be executed through Public-Private debt, inflation and fiscal deficit, while maintaining Partnerships (PPP). high levels of international reserves - have been fundamental to face the economic impact of Currently, the portfolio of mature projects, mainly COVID-19. Such strengths, in particular the fiscal in the PPP modality, promoted by ProInversión one, have made it possible to implement one of is close to USD6.0 billion. There are 19 projects the most important economic recovery plans in that will be awarded, or called for tenders, during the region (20% of GDP) and experience a rapid 2021, among which are the Huancayo Huancavelica rebound after having recorded historical falls due Railway project (USD263million investment), to COVID-19. the Mass Distribution of Natural Gas project to 7 regional centers in the center and south of the country (USD200 million), the Headworks project, to increase and ensure the supply of water in ProInversión, as a State agency, is tasked with the city of Lima (USD480 million), 3 electricity promoting and facilitating private investment in transmission projects (USD210 million), 2 hospital Peru and to assist the investor at every stage, projects (USD300 million) ), 1 urban connectivity from prospecting to establishment and post- project in Lima and Callao (USD1,965 million), establishment. The ProInversión portfolio contains 1 telecommunications project (USD291 million), projects that will make an important contribution 2 wastewater treatment plants and sewerage to improving connectivity and competitiveness in networks (USD227 million), 5 educational the country, and at the same time meet the needs infrastructure projects (USD619 million), 1 of social infrastructure, and by closing that gap will port project (USD637 million) and 1 industrial provide even greater strength to the underpinning park (USD750 million). For all these projects, of sustained growth. international public tenders will be called through which it seeks to generate competition and attract We welcome investors to explore the possibilities the best global operators in order to ensure the of investment in Peru and share the benefits of its provision of services with high quality standards promising development. throughout the concession period.
It is necessary to emphasize that foreign investment can be freely developed in Peru under the same conditions as domestic investment and is not subject to meeting any performance requirements. Additionally, Peruvian regulations include special regimes that guarantee the permanence of aspects relevant to the development of investments, such as the free circulation of capital, free competition and the guarantee of private property. This policy is based on the conviction that private investment must be the engine that drives growth, and we need the participation of domestic and foreign capitals to boost the development of the huge opportunities that the country offers. 5 Taxes 10
1 Government 13 1 Mining 84 2 Geography 14 2 Financial System, 103 1 3 Currency and 15 3 Securities Market, and CON Background Exchange Rate Sector Pension System Information 4 Population, 16 Analysis 3 Energy 110 Occupation and 4 Electricity and Water 112 Human Development 5 Hydrocarbons 116 TEN 5 Economy 26 6 Construction 119 6 Country Risk and 41 7 Manufacturing 120 Investment Grade 8 Trade and Domestic 121 Consumption 1 Investment Promotion 45 9 Agriculture and 124 TS Conditions Agribusiness 2 2 Promotion Mechanisms 52 10 Fisheries 130 click on the title to go Business directly to the chapter for Investment in 11 Transportation and 133 Environment Infrastructure and Communications page 1 / page 2 Utilities 12 Tourism, Cuisine, and 138 3 Investment Indicators 63 Hotel Management 4 Trade Agreements 71 5 Peru and the 81 1 Joint Stock Companies 144 Organization for 2 Closely Held 145 Economic Co-operation 4 Corporations and Development Incorporating 3 Publicly Held 146 (OECD) a Company Corporations in Peru 4 Limited Liability 147 Companies 5 Branches 148
1 Direct Taxes 152 2 Indirect Taxes 164 5 3 Municipal Taxes 166 Taxes 4 Customs Regime 167 5 Legal Stability 172 Agreements 6 Mining Law 173 7 Agricultural Regime 175 5 Taxes 11
1 Hiring System 177 2 Current Fringe Benefits 178 6 3 Taxes and 180 Annexes Labor and Contributions Levied CON Employment • Principal Regulatory and Investment 203 on Remunerations Law 4 Termination of the 182 Promotion Entities in Peru Employment Contracts 5 Immigration 183 • Economic Promotion Institutions and 209 TEN Relevant Entitites 6 Supervisory Bodies 184 7 Additional Measures 184 due to the COVID-19 • EY Services for Business and 222 Public Health Crisis Investment in Peru TS 8 Repeal of the Agrarian 184 Labor Regime click on the title to go • Directory of Peruvian Embassies and 235 directly to the chapter Consulates 1 Accounting Standards 186 page 1 / page 2 7 • Directory of Regional Governments 248 Accounting Standards • Directory of Principal Chambers of 252 Commerce 1 Supervisory Bodies 188 2 Copyright 189 8 3 Industrial Property 190 Intellectual 4 Member Countries of the 192 Property Paris Convention Regulations
1 General Environmental 194 Act - Law 28611 9 2 Environmental 195 Environmental Certification and Climate 3 Paris Agreement: 197 Change Nationally Determined Regulation Contribution (NDC) Peru 4 Framework Act on 199 Climate Change 5 Peru's Carbon Footprint 200 6 Roadmap to a Circular 201 Economy Background 12 1 Information
BACKGROUND INFORMATION 1 Background 13 1 Information
Peru is a constitutional democratic republic with a the Legislative Branches, and they become law after multi-party system. Under the current Constitution being passed through Congress and enacted by the of 1993, the President is the Head of State and President of the Republic of Peru. The Judiciary Government, elected for a five-year period, without and the National Electoral Board are independent GOVERNMENT the possibility of running for immediate re-election. institutions. 1 The President designates the Prime Minister and the rest of the Cabinet. There is a 130-member The Peruvian Government is directly elected and unicameral Congress elected for a five-year term. voting is compulsory for all citizens between the Bills may be proposed either by the Executive or by ages of 18 and 70.
COUNTRY OVERVIEW
Type of Government Regional Governments Constitutional Republic 25 Regional Governments (including the Legal System Constitutional Province of Callao) Constitutional State of Law based on laws and codes Local Governments Executive Branch • 196 Provincial Municipalities • President of the Republic: Head of State and • 1,678 District Municipalities Government International Relations • Elections: Every five years by popular vote • Member of the United Nations since 1945 and a (consecutive re-election not permitted). Next member of the Security Council in 2006 and 2007. elections: April 2021 • Member of the World Trade Organization (WTO) • Cabinet: The Cabinet of Ministers is appointed by since 1995. the President • Member of the Pacific Alliance since its creation in Legislative Branch 2011. • Unicameral Congress (a bill has been submitted to • In 1998, it became a member of the Asia Pacific there is a bill to adopt bicameralism) Economic Cooperation (APEC) • 130 seats • Peru hosted the APEC and EU-LAC summits in • Members are elected by popular vote for a period of 2008 and the Arab-South American Summit (ASPA) five years in 2012. In 2013, Peru hosted the World Economic • Next elections: April 2021 Forum on Latin America. Furthermore, it was the Judiciary Branch site of the COP 20 (Climate Summit organized by Judges are appointed by the National Judge the UN) in 2014. It hosted the World Bank (WB) and Selection and Evaluation Board International Monetary Fund (IMF) Annual Assembly Main Autonomous Entities in 2015. It also hosted the Asia Pacific Economic • Constitutional Court Cooperation (APEC) Summit in 2016. Likewise, it • National Electoral Board hosted the Summit of the Americas in 2018. • Controller General's Office • Peru has entered into several economic cooperation • Central Reserve Bank of Peru (BCRP) and Free Trade Agreements (FTAs) with many countries (see Section 2.4 Trade Agreements). • Superintendency of Banking and Insurance and Private Pension Fund Management Companies (SBS)
Source: Peruvian Constitution / National Institute of Statistics and Information (INEI) / United Nations (UN) / Ministry of Foreign Affairs (MRE) Background 14 1 Information
Peru is located on the west central coast of South • The Highlands, or Sierra, is the site of the Andean America. It is bordered by the Pacific Ocean to the Mountain Range, covering 27.9% of the national west, by Chile to the south, by Brazil and Bolivia territory and serving as home to approximately to the east, and by Colombia and Ecuador to the 7.9 million inhabitants. This Region contains the north. With a total land area of 1,285,215.60 km2, GEOGRAPHY country's major mineral deposits. 2 Peru is the third largest country in South America after Argentina and Brazil, and can be divided • The Amazon Rainforest or Selva is the largest geographically into three natural regions: region and occupies 60.4% of the country's territory, rich in petroleum and forest resources. • The Coast, a narrow strip measuring There are approximately 3.1 million inhabitants in approximately 3,080 km long. Although it this area. accounts for only 11.7% of Peru's territory, it is home to approximately 21.6 million inhabitants. Lima, the political and financial capital of the country, is located in this Region.
OVERVIEW
Population Climate 32.6 million Ranges from tropical in the (estimate for 2020) Amazon Region to dry along • Urban: 79.3% the Coast, and temperate to • Rural: 20.7% very cold in the Highlands
Area Religion 1,285,215.60 km2 Freedom of Religion Principal Roman Catholic
Main Languages Time Zone Spanish, Quechua GMT – 5 (Greenwich Mean and Aymara Time minus five hours). There is no daylight saving time, and there is only one time zone throughout the entire country
Natural Resources Gold, copper, silver, zinc, lead, hydrocarbons, fisheries, phosphates and agricultural products such as grapes, avocado, coffee, potato, rice, cotton, asparagus, cocoa and organic banana, artichokes, sugar, quinoa, blueberries and corn.
Source: Central Reserve Bank of Peru (BCRP) / National Institute of Statistics and Information (INEI) Background 15 1 Information
The official currency of Peru is the Sol (PEN - APPRECIATION / DEPRECIATION AND INFLATION S/). The country has a free-floating exchange rate regime, with the government occasionally As of the end of 2020, the inflation rate in Peru intervening for purposes of stabilization. As at was 1.9%. The annual depreciation rate of the Sol CURRENCY December 31, 2020, banks were buying US Dollars against the US Dollar for 2020 was 9.0%. 3 at PEN3.616 and selling them at PEN3.621. The AND gray market has very similar exchange rates. According to the Central Reserve Bank of Peru EXCHANGE (BCRP) it is estimated that at the end of the year RATE The Sol is one of the least volatile currencies 2021, the inflation rate will be 1.5% below in the world, exhibiting firmness in the face of the forecasted range, and depreciation will be international market and currency fluctuations. The around 2.0%. Central Reserve Bank of Peru (BCRP) implements fiscal stimulus and liquidity control measures. There are no restrictions or limitations on the number of 16.0 14.2 bank accounts in foreign currency or the remittance 12.0 of funds abroad that an individual or legal entity 9.6 9.0 8.0 6.4 4.7 4.4 may make. 3.2 4.1 2.6 1.9 1.9 4.0 1.4 1.5
Depreciation of the Sol of Depreciation 2.9 3.2 | 0.0 2.2 EXCHANGE RATE EVOLUTION: NUEVOS SOLES 4.0 -2.5 -1.7 -1.6 -2.0 PER USD 1 (END OF EACH YEAR) -4.2 -3.5 8.0
5 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021*
4 3.62 3.41 3.50 Inflation Appreciation/Depreciation 3.36 3.24 3.37 3.31 2.99 the Sol of Appreciation 2.80 3 2.70 2.55 *Exchange rate is estimated at PEN3.50. Inflation forecast 2 according to the December 2020 Inflation Report Source: Central Reserve Bank of Peru (BCRP)/Ministry of 1 Economy and Finance (MEF) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021*
*Projection. December 2020 Inflation Report Source: Central Reserve Bank of Peru (BCRP) Background 16 1 Information
The estimated population of Peru for 2020 is The main religion is Roman Catholicism, and approximately 32.6 million of which approximately the principal official languages are Spanish and 11.7 million (2020) reside in Lima (including the Quechua. The Aymara language is also spoken, population of the Constitutional Province of Callao). mostly in the Southern Highland Region, along POPULATION, The national workforce (total Economically Active with various other native languages, particularly 4 Population - EAP) is estimated at around 17.9 in the Amazon Jungle Region. As for literacy, the OCCUPATION million people (2019). estimated rate to be attained in 2020 is 94.4% of AND HUMAN the population over age 15. DEVELOPMENT POPULATION SUMMARY (ESTIMATE FOR 2020)
• 32.6 million (estimate for 2018) Population • 79.3% live in urban areas • 0 - 14 years old: 24.9% Age Range • 15 - 64 years old: 66.1% • 65 years or older: 9.0% Growth Rate • 1.004% Birth Rate • 17.4 births / 1,000 people Mortality Rate • 5.9 deaths / 1,000 people Gender Ratio • Births: 1.02 female / male Life Expectancy at Birth • 76.9 years
Source: National Institute of Statistics and Information (INEI)
TOTAL POPULATION AND AVERAGE ANNUAL GROWTH RATE
35,000 2.82% 3.00 2.55% 31,826 32,162 32,495 32,625 30,475 30,814 31,150 31,488 29,798 30,136 30,000 29,132 29,462 2.50 25,000 2.04% 22,639 2.00 20,000 17,762 1.90% 1.50 14,122 15,000 1.56% 1.14% 1.13% 10,420 1.13% 1.12% 1.11% 1.10% 1.08% 1.07% 1.06% 1.04% 1.00% 1.00 10,000 7,023 1.13% 5,000 0.50 1940 1961 1972 1981 1993 2009 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010 2020*
Total Population (in Thousands) Growth Rate (%)
*Estimate Source: National Institute of Statistics and Information (INEI) Background 17 1 Information
POPULATION CENSUS BY AREA OF RESIDENCE (%)
100 29.9 24.1 23.8 23.3 20.7 80 34.8 52.6 40.5 64.6 60 75.9 76.2 76.7 79.3 40 65.2 70.1 47.4 59.5 20 35.4 1940 1961 1972 1981 1993 2007 2014 2015 2020* Urban Area Rural Area
*Estimate Source: National Institute of Statistics and Information (INEI)
In 2020, the female population will be greater than while the population of the Highlands was 32.4%, the male population by 2%. The population on the and that of the Jungle was 9.6%. Coast accounted for 58.0% of the total population,
POPULATION BY NATURAL REGION ACCORDING TO THE CENSUS (%)
70 65.0 60 54.6 54.8 56.3 58.0 58.0 52.3 52.4 52.6 46.1 49.8 50 38.0 34.8 40 44.0 32.0 32.2 29.7 28.1 32.4 28.3 39.0 39.7 30 20 9.9 10.6 12.8 13.4 13.0 14.0 13.9 8.7 9.4 9.6 10 6.7 1940 1961 1972 1981 1993 2007 2013 2014 2015 2017 2020* Coast Highlands Amazon
*Estimate Source: National Institute of Statistics and Information (INEI)
EVOLUTION OF THE POPULATION PYRAMID
Age Group 2007 2020 2070 80 and Older 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 6% 4% 2% 0% 2% 4% 6% 6% 4% 2% 0% 2% 4% 6% 6% 4% 2% 0% 2% 4% 6% Men Women
Source: National Institute of Statistics and Information (INEI) Background 18 1 Information
Of the total Peruvian population, 66.1% is between TRANSFORMATION OF THE SOCIAL STRUCTURE the ages of 15-59, while the Economically Active IN PERU Population (EAP) as of 2020 was 55.0% of the total, giving Peru a “demographic bonus” effect, which Socioeconomic Level – Urban Peru may be simply explained as the structural benefit (2000) of its population being of an age to produce and consume. It is estimated that this high percentage SEL AB of workforce will extend its maximum registration 10% period for up to two and a half more decades, and SEL C the power of this “demographic bonus” is that of 20% fostering greater production, consumption, savings, SEL D and investment. Perhaps the most important issue 30%
of this demographic overview is that Peru has SEL E the advantage of practically just having begun its 40% “demographic bonus” period, which will provide it with the conditions to make the necessary public and private investments in order to cover the Socioeconomic Level – Urban and Rural Peru demands and opportunities that arise from the (2019)
consumption of its “demographic bonus” period. SEL AB 12%
According to the information provided by the SEL C National Institute of Statistics and Information 27% (INEI) and the Peruvian Association of Market Research Companies (APEIM) the distribution SEL D 27% by levels of social structure of urban Peru has
undergone significant changes, if its behavior in SEL E recent years is taken into account. 34%
In 2019, there was an increase in socioeconomic levels (NSEs) C and D, which account for 54% Socioeconomic Level – Urban Peru (2019) of the country's urban and rural population. In Metropolitan Lima, the diamond-type social SEL AB structure shows a stronger middle class with a 28% higher purchasing power and equal conditions.
SEL C 42%
SEL D 24%
SEL E 6%
Source: National Institute of Statistics and Information (INEI) / Peruvian Association of Market Research Companies (APEIM) Background 19 1 Information
In 2020, the national illiteracy rate totaled 5.6% of PROJECTED POPULATION BY DEPARTMENT IN the population aged 15 and over. Thus, considering THOUSANDS (2020) the total national population aged 15 and over, the Lima 10,628 illiterate rural population represented 14.5%, while Piura 2,047 the percentage in urban areas came to 3.4%. Of the La Libertad 2,016 total male population over the age of 15, 2.9% were Arequipa 1,497 illiterate as of 2020, while 8.3% of women over the Cajamarca 1,453 age of 15 did not know how to read or write. These Junín 1,361 percentages keep decreasing year by year. Cusco 1,357 Lambayeque 1,310 ILLITERACY RATE OF THE POPULATION Puno 1,237 AGED 15 AND OVER, BY SEX AND AREA OF Áncash 1,180 RESIDENCE IN 2020 (%) Prov. Const. del Callao 1,129 Loreto 1,027 12 Ica 975 14 San Martín 899 12 Huánuco 760 10 Ayacucho 668 8.3 8 Ucayali 589 6 Apurímac 430 4 Amazonas 426 2.9 2 Tacna 370 Huancavelica 365 Male Female Pasco 271 Tumbes 251 Moquegua 192
Madre de Dios 173 16 14.5 14
12 2,000 4,000 6,000 8,000
10,000 12,000 10
Source: National Institute of Statistics and Information (INEI) 8
6
Coinciding with the population percentages by 4 3.4
Region, the three most populous departments of 2 Peru belong to the Coast Region: Lima, Piura and
La Libertad, followed by Cajamarca, Puno, Junín, Urban Rural Cusco, and Arequipa. Source: National Institute of Statistics and Information (INEI) Background 20 1 Information
REAL MONTHLY INCOME PER CAPITA ACCORDING TO GEOGRAPHIC REGIONS (IN USD)
600 504.3 500 470.4 476.6 488.6 439.9 462.1 400 378.9 392.2 344.6 344.6 326.0
300 235.2 213.7 222.6 211.1 217.4 200 165.5 182.8 126.6 126.6 133.0 202.5 100 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Urban Rural
*Decrease explained mainly through the devaluation of the Sol against the US Dollar Source: National Institute of Statistics and Information (INEI)
POVERTY AND EMPLOYMENT
The boost of economic growth together with These graphs will give us a picture of the strong the development of social programs have impact on the overall situation in the years 2020 contributed to the relief and reduction of poverty. and 2021 as a result of the COVID-19 pandemic In this regard, Peru has shown over the past few where some estimates increase extreme poverty years a sustained a reduction in poverty as a whole by up to 10 points being able to reach 30.3% of the and in extreme poverty. population in 2020.
TOTAL INCIDENCE OF POVERTY (%)
40 35 33.5 30.8 30.3 30 27.8 25.8 23.9 25 22.7 21.8 21.7 20.7 20.5 20.2 20 15 9.5 10 7.6 6.3 6.0 5.3 6.3 4.7 4.3 3.8 5 3.8 2.8 2.8 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* Total Poverty Extreme Poverty
*Estimated Source: National Institute of Statistics and Information (INEI) / Fondo de las Naciones Unidas para la Infancia (UNICEF) Background 21 1 Information
In 2019, the country's Economically Active Population (EAP) increased to 17.9 million persons, and the employed EAP totaled 17.3 million in the same period.
As of the third quarter of 2020, the EAP consists of 15.7 million people of which 90.4% are employed.
EVOLUTION OF THE ECONOMICALLY ACTIVE POPULATION (IN THOUSANDS)
30,000 25,109 24,943 25,000 23,034 23,771 21,579 22,303 20,875 17,970 20,000 17,307 15,949 16,328 16,498 17,216 15,448 15,307 15,683 15,919 16,511 15,779 15,000 14,758 14,257
10,000
5,000 1,522 691 642 645 697 705 663 2009 2011 2013 2015 2017 2019 2020* Working-age Population Total EAP Working EAP Unemployed EAP
*As of 3rd quarter of 2020 Source: National Institute of Statistics and Information (INEI)
WORKING-AGE POPULATION BY ACTIVITY
Activity 2011 2013 2015 2017 2019 2020* Working–Age Population (WAP) 100.0 100.0 100.0 100.0 100.0 100.0 In Thousands 21,579.4 23,303.4 23,034.2 23,771.7 25,109.4 24,943 Economically Active Population (EAP) 73.9 73.2 71.6 72.4 71.6 63.3 (as % of the WAP) - Employed EAP (as % of the EAP) 96.0 96.0 96.5 96.3 96.3 90.4 - Unemployed EAP (as % of the EAP) 4.0 4.0 4.2 3.7 3.7 9.6 Economically Inactive Population (EIP) 26.1 26.8 28.6 27.6 28.4 36.7 (as % of the WAP)
*As of 3rd quarter of 2020 Source: National Institute of Statistics and Information (INEI) Background 22 1 Information
GINI INDEX SOCIAL PROGRESS INDEX
The Gini Index measures income inequality. The Social Progress Index, developed by Social This indicator is a number ranging from zero to Progress Imperative, integrates social and one, where zero implies perfect equality in the environmental indicators into three large groups: distribution of income and one implies perfect Basic Human Needs, Wellbeing and Opportunity. inequality (in other words, as if only one person or Peru is considered to be in the Upper Middle Social home that concentrates all the income exists). This Progress tier, with a score of 74.22 points, ranking coefficient is calculated for several countries of 59 out of the 163 countries analyzed. Latin America as follows: SOCIAL PROGRESS INDEX 2020 Latin America / Gini Index 2018 Argentina 0.396 Chile (34) 83.34 Bolivia 0.438
Brazil 0.540 Uruguay (38) 82.99 Chile 0.454 Colombia 0.497 Argentina (41) 80.66 Costa Rica 0.493 Ecuador 0.454 Ecuador (53) 75.45 El Salvador 0.405 Peru (59) 74.22 Guatemala (2014) 0.483 Honduras 0.481 Colombia (60) 74.00 Mexico (2016) 0.434
Nicaragua (2014) 0.462 Brazil (61) 73.91 Panama 0.498
Paraguay 0.474 Mexico (62) 73.52 Peru 0.439 Dominican Republic 0.444 Paraguay (70) 72.48 Uruguay 0.391 Bolivia (87) 69.23 Venezuela (2006) 0.469
Source: Social Panorama of Latin America 2019. Economic 10 20 30 40 50 60 70 80 90 100 Commission for Latin America and the Caribbean (ECLAC) Source: Social Progress Imperative
The impact of the COVID-19 pandemic is expected to substantially change this index. Background 23 1 Information
SOCIAL PROGRESS INDEX
Score Rank Score Rank Score Rank Foundations of Basic Human Needs 82.46 85 78.50 52 Opportunity 61.69 63 Wellbeing Nutrition & Basic Access to Basic 91.09 90 78.85 101 Personal Rights 81.56 62 Medical Care Knowledge Political rights Undernourishmnet Women with no 6.70 89 0.02 96 (0=no rights, 30.00 79 (% of pop.) schooling 40=full rights) Freedom of Child mortality rate Primary school expression (deaths/1,000 live 14.31 82 enrollment (% of 98.58 66 0.92 30 (0=no freedom, births) children) 1=full freedom) Maternal Secondary school Freedom of religion mortality rate 69.05 98 attainment (% of 62.20 88 (0=no freedom, 3.73 43 (deaths/100,000 live pop.) 4=full freedom) births) Gender parity Access to justice Child stunting (% de in secondary 12.00 85 0.16 109 (0=non-existent, 0.60 104 niños) attainment (distance 1=observed) from parity) Access to quality Property rights Deaths from education for women infectious diseases 73.11 107 1.31 120 4.24 81 (0=unequal, (0=no rights, (deaths/100,000) 4=equal) 5=full rights)
Access to Personal Freedom Water & Sanitation 83.71 92 Information & 78.50 59 59.71 108 & Choice Communications Deaths attributable Mobile telephone to unsafe water, Vulnerable subscriptions sanitation and 4.78 105 1 employment (% de 50.42 118 (subscriptions/100 123.76 hygiene (per employees) people) 100,000 pop.) Populations Access to online using unsafe or Early marriage (% of 17.69 81 government 0.76 55 11.13 114 unimproved water women) (0=low, 1=high) sources (%) Populations Satisfied demand for using unsafe Media censorship 32.37 111 3.48 27 contraception (% of 68.50 89 or unimproved (0=frequent, 4=rare) women) sanitation (%) Internet users Corruption 52.54 107 36.00 100 (% of pop.) (0=high, 100=low)
Overperforming by 1 or more pts. Overperforming by less than 1 pt. Performing within the expected range Underperforming by less than 1 pt. Underperforming by 1 or more pts. No data available Background 24 1 Information
Score Rank Score Rank Score Rank Foundations of Basic Human Needs 82.46 85 78.50 52 Opportunity 61.69 63 Wellbeing Shelter 90.30 82 Health and Wellness 73.45 50 Inclusiveness 47.14 83 Acceptance of gays Access to electricity Life expectancy at 95.20 126 25.11 13 and lesbians 0.36 53 (% of pop.) 60 (years) (0=low, 100=high) Premature Household Discrimination and deaths from non- air pollution violence against 25.17 45 communicable 9 8.30 141 attributable deaths 178.08 minorities diseases (deaths/100,000) (0=low, 10=high) (deaths/100,000) Equality of political Usage of clean fuels Access to essential power by gender and technology for 80.00 99 services (0=none, 72.95 77 2.40 47 (0=unequal power, cooking (% of pop.) 100=full coverage) 4=equal power) Equality of Access to quality politial power by healthcare socioeconomic 1.48 117 2.51 54 (0=unequal, position 4=equal) (0=unequal power, 4=equal power) Equality of political power by social group 1.80 120 (0=unequal power, 4=equal power)
Environmental Access to Advanced Personal Safety 64.73 102 83.22 60 58.34 74 Quality Education Outdoor air pollution Homicide rate Expected years of 7.91 113 attributable deaths 17.89 48 3.54 25 (deaths/100,000) tertiary education (deaths=100,000) Greenhpuse gas Women with Percieved criminality 4.00 88 emissions (total CO2 143 advanced education 0.38 125 (1=low, 5=high) 111.00 equivalent) (%) Political killings and torture Quality weighted 0.85 67 Particulate matter 24.64 109 18.20 56 (0=low freedom, universities (points) 1=high freedom) Traffic deaths 13.40 86 Biome protection 14.55 79 Citable documents 0.12 114 (deaths/100,000)
Overperforming by 1 or more pts. Overperforming by less than 1 pt. Performing within the expected range Underperforming by less than 1 pt. Underperforming by 1 or more pts. No data available
Source: Social Progress Imperative Background 25 1 Information
HUMAN DEVELOPMENT
The Human Development Index (HDI) is a compound index that measures the average advances in three basic groups of human development: a long and healthy life; knowledge; decent standards of living, via the combination of indicators for life expectancy, educational achievements, and income. The HDI defines a minimum and maximum value for each group (called “objectives”) and then shows the position of each country with regard to these objective values, expressed in the form of a value between 0 and 1. According to the 2019 Human Development Report issued by the United Nations Development Program (UNDP) the ranking and evolution of the six principal countries in Latin America are as follows:
Classification Growth Rate Ranking 1980 1990 2000 2005 2011 2015 2019 Country 2019 / 1980 World Total 0.561 0.600 0.639 0.666 0.692 0.717 0.731 30% Latin America and The 0.574 0.623 0.683 0.708 0.739 0.751 0.759 32% Caribbean Very High Human Development 42 • Chile 0.638 0.702 0.759 0.789 0.817 0.847 0.847 33% 48 • Argentina 0.675 0.701 0.755 0.771 0.810 0.827 0.830 23% High Human Development 76 • Mexico 0.598 0.654 0.723 0.745 0.773 0.762 0.767 28% 79 • Brazil 0.522 0.590 0.669 0.699 0.728 0.754 0.761 46% 79 • Colombia 0.556 0.600 0.658 0.681 0.717 0.727 0.761 37% 82 • Peru 0.580 0.619 0.679 0.699 0.738 0.740 0.759 31%
Note: The ranking refers to each country's position in the world classification for 2019. Source: United Nations Development Program (UNDP)
The impact of the COVID-19 pandemic is expected to substantially change this index. Background 26 1 Information
Gross Domestic Peru has rich deposits of copper, silver, gold, lead, • USD196 billion (20201) Product (GDP) zinc, natural gas, and petroleum. Due to climate GDP per Capita • USD6,267 (20202) variations in its regions, as well as its natural and GDP per Capita cultural resources, it is internationally classified as a ECONOMY (Purchasing Power • USD11,516 (20201) mega-diverse country. 5 Parity / PPP) Net International • USD74.7 billion Peru's economy reflects its varied geography. Reserves (as at December 31, 2020) The abundance of resources is found mainly in • USD21.9 billion mineral deposits in the mountainous regions, Foreign Debt (as at November 30,2020) while its extensive maritime territory has always Total Public Debt • 35.1% of the GDP (20202) traditionally yielded excellent fishing resources. Despite the fluctuations of the world economy, the Fixed Gross • 20.5 of the GDP (20202) administration has used the savings generated by Investment the high prices of commodities between 2006 and Unemployment • 9.6% (as at October 31, 2020) 2008 and 2011 and 2012 to invest in infrastructure Rate and in social aid programs. Population Living Below the Poverty • 30.3 (20203) The Peruvian economy has strong macroeconomic Line indicators thanks to the implementation of a Minimum Wage • S/930 (approximately USD262) countercyclical macroeconomic policy and a • China, United States, Canada, Principal favorable external environment. Accordingly, Switzerland, South Korea, Destinations of following an estimated drop in GDP of 11.5% Japan, India, Brazil, The Peruvian Exports in 2020, a speedy recovery is expected, with Netherlands, Chile a GDP growth of 11.5% in 2021 as estimated • Gold, copper, silver, zinc, lead, by the Central Reserve Bank of Peru (BCRP) as crude oil and byproducts, coffee, of December 2020. Additionally, the Peruvian potatoes, asparagus, paprika, Principal Exports organic bananas, quinoa, economy would grow 4.1% annually on average artichoke, berries, mango, between 2022 and 2026, according to estimates by cacao, textiles, fishmeal the Ministry of Economy and Finance. and urea • China, United States, Brazil, Peru also stands out for its controlled inflation, with Principal Countries Mexico, Argentina, Chile, anchored expectations with the target range set by of Origin of Colombia, Ecuador, Germany, the Peruvian Central Reserve Bank (BCRP) (between Imports to Peru Japan 1% and 3%), thus reporting the lowest rates out of • Petroleum and byproducts, all the countries that follow this same system in electronic items, plastics, Latin America. In fact, 2020 will mark 23 years of Principal Imports machinery, vehicles, iron and single-digit annual inflation rates. steel, wheat and paper The Peruvian economy is likewise notable for 1Calculated according to the World Economic Outlook for its gross public debt ratio, which is expected to October 2020. International Monetary Fund (IMF). 2Calculated according to the December 2020 Inflation Report. increase to 35.1% of the GDP, significantly lower 3Estimate from the United Nations Children's Fund (UNICEF) as of than that of emerging economies (63.1% of GDP) October 2020 and Latin America (81.5% of GDP). Source: Central Reserve Bank of Peru (BCRP) / Ministry of Economy and Finance (MEF) / International Labor Organization (ILO) / National Institute of Statistics and Information (INEI) / International Monetary Fund (IMF) Background 27 1 Information
Peru is estimated to maintain a comfortable level of Peru's response to the economic impact of international reserves. As of December 31, 2020, COVID-19 has been one of the most notable in these reserves total USD74.7 billion, equivalent to the world, especially in its efforts to counteract 38% of the GDP. the effects of the economic emergency. The macroeconomic soundness achieved through years As a result of the estimated evolution over the of tax prudence and a well thought out monetary coming years of its public finances and its economy policy have allowed Peru to maintain stability and in general, Peruvian public debt has maintained provided it with sufficient resources to tackle the its credit rating (S&P and Fitch Rating: BBB+ / crisis. The government's forceful response has Moody's: A3), with a stable outlook, unlike the included tax measures totaling approximately 20% downward revisions experienced by other countries of its GDP, even exceeding the average for more in the region. developed countries (19.8% of GDP). The range of public spending instruments, tax measures, and It should be noted that Peru is a member country of other steps cover both the private sector and the the Pacific Alliance, an entity that seeks to free up general public. the commercial exchange of goods and services, the free circulation of people and capital, and Monetary policy has been expansive, with an promote cooperation mechanisms between the interbank interest rate among the lowest in the member countries, i.e. Peru, Chile, Mexico, and region with a view to ensuring the liquidity of Colombia. Peru is also following a Country Program the economy. executed with the Organization for Economic Cooperation and Development (OECD) to strengthen its public policies.
INDEX OF SEVERITY OF GOVERNMENTAL RESPONSE TO COVID-19, MARCH 2020 (100=strictest response)
Peru 94
Italy 92
Spain 85
Brazil 75
Chile 73
United States 73
10 20 30 40 50 60 70 80 90 100
As at August 17, 2020 Source: Hale et al. (2020), Oxford COVID-19 Government Response Tracker, Blavatnik School of Government Background 28 1 Information
SUMMARY OF TAX MEASURES IN RESPONSE TO COVID-19 (% OF GDP)
40.9 40 37.5 35.3 9.4 3.5 30 11.3 19.8 20.0 20 17.7 34.0 6.9 31.5 8.9 12.2 11.9 7.7 9.0 10 24.0 2.3 5.8 6.5 3.0 5.1 4.8 10.9 10.8 10.0 1.2 6.4 5.4 6.0 3.1 2.8 1.0 2.0 2.0 0.2 Germany Italy Japan Developed Peru Chile Group of Brazil Colombia Emerging Argentina Low-Income Countries Twenty Countries Developing (G-20) Countries
Below the Line (1) Others (2) Above the Line (3)
Note: Country average is determined based on data from the International Monetary Fund (IMF). Developed Countries: France, Germany, United States, etc. (1) Tax policy measures involving the granting of government-backed credits. (2) In the case of Peru, the Plan includes cash flow measures from the public's private savings, such as severance pay and private pension funds. (3) Tax policy measures involving public spending and taxes. Sources: International Monetary Fund (IMF), Economic Commission for Latin America and the Caribbean (CEPAL), Ministry of Economy and Finance (MEF)
ECONOMIC STIMULUS PACKAGES IN RESPONSE TO COVID-19 IN LATIN AMERICA, 2020 (% OF GDP)
25 20.0 20 17.7 15 11.9 10 9.0
5 4.8 1.2
Peru Chile Brazil Colombia Argentina Mexico
Includes information on economic packages as of July 2020. Sources: International Monetary Fund (IMF), Economic Commission for Latin America and the Caribbean (CEPAL), Ministry of Economy and Finance (MEF)
MONETARY POLICY INTEREST RATES IN LATIN AMERICA (%)
8.0 7.0 6.0 5.0 4.25 4.0 3.0 2.00 2.0 1.75 1.0 0.50 0.25
Mexico Brazil Colombia Chile Peru
January 2020 July 2020 December 2020
Sources: Central banks of each country Background 29 1 Information
PERU'S ECONOMIC PLAN IN RESPONSE TO COVID-19
Public Spending Tax Measures Other Instruments (4.6% of the GDP) (2.3% of the GDP) (13.0% of the GDP) Exemption from contributions and Emergency response Tax relief for families (liquidity) extraordinary withdrawal from pension funds Economic support for families Tax relief for companies (liquidity) Release of severance pay funds Guarantee program to ensure the Economic support for companies Administrative aid chain of payments Promotion of investment and Tax measures Economic support measures current expenditures
Focused on containment Focused on economic reactivation
Source: Ministry of Economy and Finance (MEF), National Superintendency of Customs and Tax Administration (SUNAT)
With the referred measures Peru will attain one of the highest growth and recovery rates in 2021 (11.0% as estimated by the Central Reserve Bank of Peru-BCRP) well above those of the emerging economies (6.0%) and the remaining countries of Latin America and the Caribbean (3.6%) according to the latest forecasts issued in October by the International Monetary Fund (IMF).
GDP GROWTH IN MAJOR ECONOMIES (PERCENTAGE CHANGE)
2.8 World -4.4 5.2
1.7 Developed -5.8 economies 3.9 Emerging 3.7 -3.3 economies 6.0
Latin America and 0.1 -8.1 the Caribbean 3.6
2.2 Peru -11.5 11.5
-14 -12 -10 -8 -6 -4 -2 0 2 4 6 8 10 12 2019 2020* 2021*
*World Economic Outlook forecasts as of October 2020. For Peru, forecasts are based on the December 2020 Inflation Report. Source: Central Reserve Bank of Peru (BCRP), International Monetary Fund (IMF) Background 30 1 Information
ESTIMATED GROSS DOMESTIC PRODUCT (GDP) PERCENTAGE GROWTH RATES IN LATIN AMERICA
12 11.5 10 8 5.5 6 4.9 4.5 4.3 4.0 4 3.5 2.2 3.3 2.8 2 0.2 1.1 0.2 1.1 0 -0.1 -2 -2.2 -4 -4.5 -4.0 -6 -6.0 -5.8 -8 -8.2 10 -9.0
-12 -11.5 -11.8 -14 Peru Argentina Uruguay Chile Colombia Mexico Paraguay Brazil
2019 2020* 2021*
*Estimated. World Economic Outlook, October 2020. For Peru, forecasts are based on the December 2020 Inflation Report. Source: International Monetary Fund (IMF), Central Reserve Bank of Peru (BCRP)
MAIN ECONOMIC ACTIVITIES IN THE REGIONS OF PERU
~ Fisheries ¥ Textile Industry Ecuador Colombia + Petroleum # Cement Plant
~ ¬ Oil Refinery µ Chemicals Plant Cabo~ Blanco ∏ Iquitos ¬ ¤ Sugar Refinery Ф Metals Industry ~ + ¥ Au Talara + ¤ Cajamarca + ª Fishmeal Plant ∆ Foundry Chiclayo ~ # Pacasmayo Metal-Mechanical Pucallpa ¬ ^ Natural Gas ∏ ~ ¤ ¥ Brazil Plant Zn Pb Trujillo Ag + ~ Au Gold Pb Lead ª ∆ ∏ ~ Ag Chimbote ¤ µ # ∆ Pb Zn Ag Silver Fe Iron ~Paramonga La Oroya Cu Au Ag Sn ¬ ∏ ¥ # µ Cu Copper Tin ª Au Zn Lima - Callao Ag ~ ¥ µ ^ Zn Zinc ¥ Fe Cuzco ª Zn ¥ Pisco Au Ag # ~ Ica ¥ ~ # Puno Arequipa Sn ~ Cu ~ ¤ Bolivia Mollendo~ ª ∆ ~ Ilo ~ Chile
Source: University of Texas - Perry Castaneda Library Map Collection Background 31 1 Information
REAL GROSS DOMESTIC PRODUCT (GDP) OF PERU (IN USD BILLIONS)
231 250 225 214 211 201 201 200 193 190 194 196 172 148 150
100
50 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* 2021*
*Estimated as of October 2020 Source: International Monetary Fund (IMF)
GROSS DOMESTIC PRODUCT (GDP) (PERCENTAGE CHANGE)
11.5 10 8.5 8 5.8 6 6.5 3.3 4.0 4.0 4 6.0 2.2 2 2.4 2.5 0
-11.5 -12 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* 2021*
*December 2020 Inflation Report Source: Central Reserve Bank of Peru (BCRP)
GROSS DOMESTIC PRODUCT (GDP) BY INDUSTRY (PERCENTAGE CHANGE)
Type of Company 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* 2021* Agriculture and Livestock 4.1 5.9 2.7 1.6 3.5 2.7 2.8 7.8 3.4 0.7 2.7 Fisheries 52.9 -32.2 24.8 -27.9 15.9 -10.1 4.7 47.7 -25.9 3.0 8.5 Mining -2.1 2.5 4.3 -2.2 15.7 21.2 4.5 -1.7 -0.8 -14.1 14.4 Hydrocarbons 5.1 1.0 7.2 4.0 -11.5 -5.1 -2.4 0.0 4.6 -11.1 6.8 Manufacturing 8.6 2.5 4.9 -3.6 -1.5 -1.4 -0.2 5.9 -1.7 -1.7 8.0 Electricity and Water 7.6 5.8 5.4 4.9 5.9 7.3 1.1 4.4 3.9 -6.1 7.9 Construction 3.6 15.8 9.0 1.9 -5.8 -3.2 2.1 5.3 1.5 -15.6 17.4 Commerce 8.9 7.2 5.9 4.4 3.9 1.8 1.0 2.6 3.0 -16.2 18.4 Other Services 7.0 7.0 6.1 5.1 4.1 4.1 3.3 4.4 3.8 -10.6 9.5 GDP 6.5 6.0 5.8 2.4 3.3 4.0 2.5 4.0 2.2 -11.5 11.5
*December 2020 Inflation Report Source: Central Reserve Bank of Peru (BCRP) Background 32 1 Information
PERU'S GROSS DOMESTIC PRODUCT (GDP) BY ECONOMIC SECTOR IN PERCENTAGES, BASED ON THE ECONOMIC STRUCTURE OF THE YEAR 2007
Manufacturing Construction Finance and Fisheries 16.5% 5.1% Insurance 0.7% 3.2% Mining and Transport and Accommodation Other Services Hydrocarbons Couriers and Restaurants 14.9% 14.4% 5.0% 2.9% Commerce Public Administration Telecommunications Import Duties and 10.2% and Defense 2.7% other Taxes 4.3% 8.3% Agriculture Services Provided Electricity and Livestock to Companies and Water 5.9% 4.2% 1.7%
Source: National Institute of Statistics and Information (INEI)
NET INTERNATIONAL RESERVES (IN USD MILLIONS)
80 74,707 70 68,316 63,991 65,663 63,621 62,308 61,485 61,686 60,121 60
50 48,816 44,105 40 31,196 33,135 30 27,689
20 17,275 12,631 14,097 10,194 10 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Central Reserve Bank of Peru (BCRP)
NET INTERNATIONAL RESERVES 2019 (AS A PERCENTAGE OF THE GROSS DOMESTIC PRODUCT – GDP)
Chile 15
Colombia 16
Mexico 14
Perú 38 (2020)
5 10 15 20 25 30 35 40
Source: Bank of Mexico, Bank of the Republic of Colombia, Central Bank of Chile, Central Reserve Bank of Peru (BCRP) Background 33 1 Information
DOLLARIZATION RATE OF BANK CREDITS
50 46.1 44.6 42.9 42.2 40 38.2 30.5 29.1 29.3 30 27.8 25.9 20.7 20
10 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*
*As of November 2020 Source: Central Reserve Bank of Peru (BCRP). International Monetary Fund (IMF)
DOLLARIZATION RATE OF BANK DEPOSITS
60
50 46.1 45.1 46.0 45.4 42.4 42.4 39.5 40 38.0 37.0 35.8 31.2 30
20
10 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*
*As of November 2020 Source: Central Reserve Bank of Peru (BCRP). International Monetary Fund (IMF)
GROSS DOMESTIC PRODUCT (GDP) BY TYPE OF EXPENDITURE (PERCENTAGE CHANGE)
Variables 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* 2021* Gross Domestic 6.5 6.0 5.8 2.4 3.3 4.0 4.5 4.0 2.2 -11.5 11.5 Product Imports 9.8 10.4 3.6 -1.4 2.4 -1.7 3.6 3.2 1.2 -16.5 10.1 Domestic Demand 7.8 7.3 7.2 2.2 2.9 1.1 1.4 4.2 2.3 -10.7 10.2 a. Private 6.4 5.8 5.3 4.1 3.4 3.5 3.8 3.8 3.0 -9.8 8.8 Consumption b. Public 4.8 9.4 6.7 10.1 9.5 5.7 3.0 0.1 2.1 5.4 5.7 Consumption Private Investment 11.4 13.5 6.4 -2.1 -4.5 -4.3 5.0 4.5 4.0 -19.0 17.5 Public Investment -18.0 20.8 12.1 -2.0 -7.5 10.3 4.5 5.6 -1.4 -9.1 14.0 Exports 8.8 5.4 -0.9 -0.8 3.3 6.9 5.5 2.4 0.8 -18.8 15.3
*According to the Ministry of Economy and Finance (MEF), public investment and private investment registered a fall of 9.1% and 19.0% respectively in 2020. December 2020 Inflation Report Source: Central Reserve Bank of Peru (BCRP) Background 34 1 Information
DOMESTIC DEMAND (PERCENTAGE CHANGE)
16 14.9 12.1 13.3 12 10.2 7.8 8 7.3 7.2 4.2 2.9 4 2.2 1.1 1.4 2.3 0
-4 -3.5 -8
-12 -10.7 -16 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* 2021*
*December 2020 Inflation Report Source: Central Reserve Bank of Peru (BCRP)
COMPANIES WITH ANNUAL REVENUES OF MORE THAN USD360 MILLIONS (MORE THAN ONE BILLION SOLES)
300
250 30 40 30 30 40 30 35 30 200 30
150 20
15 15 15 100 13 8 50 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
ECompanies with a turnover >= USD360 MM Companies with a turnover >= USD545 MM Companies with a turnover >= USD725 MM Companies with a turnover >= USD900 MM
Source: Peru Top Publications / Top 10k Companies in Peru 2020 Background 35 1 Information
At the end of 2019, total exports amounted to Exports of the oil and petroleum byproducts sector USD47.7 billion, while imports totaled USD41.1 (USD3.121 billion) dropped by 26%. Crude oil billion. The main exports stemmed from the mining, and oil byproducts dropped by 12.2% and 26.5%, hydrocarbons, agricultural and livestock, and respectively. fisheries industries. In addition, traditional agricultural exports showed According to the estimates, Peruvian exports would an upward trend of 2.1% in 2019, while fisheries reach USD42.0 billion in 2020, while imports would suffered a slight decrease of 0.5%. account for an approximate amount of USD34.2 billion. In 2019, nontraditional exports reached their peak in over ten years, after maintaining sustained In 2019, traditional exports totaled USD32.188 growth since 2016. These results are due to the billion, 70% of total exports abroad, as a result stable performance of agricultural exports (7%), the of delayed shipments in the mining and the oil fisheries sector (18.5%), and chemicals industry and petroleum byproducts sectors, which jointly (3.5%). accounted for 64.1% of total exports and 91.6% of traditional exports. Three of the most important export products of the agriculture and livestock sector, which accounted Similarly, mining exports (USD26.372 billion), which for 45.8% of all nontraditional exports, were fresh account for 81.9% of traditional exports registered grapes (USD875 million; 8%), blueberries (USD825 a decline of 5.3% compared to 2018. This result million; 51%), and avocados (USD752 million; 4%). was due to lower copper and copper concentrate For its part, the fisheries sector continued to grow shipments (USD12.187 billion; -6.6%), which thanks to increased shipments of frozen mollusks accounted for 46.2% of the sector's exports; as well (USD578 million; 65%); cuttlefish and squid as gold (USD6.776 billion; -5.7%) and other zinc (USD262 million; 5.6%), and other frozen shell- concentrates (USD1.633 billion; -24.8%). tailed shrimp (USD92 million, -1.4%).
TRADE BALANCE (IN USD BILLIONS)
51.9 49.1 50 46.4 47.4 47.7 42.9 45.4 41.0 42.4 41.9 42.0 39.5 41.0 37.3 38.7 41.1 40 35.8 37.2 37.0 35.1 38.7 34.4 34.2 27.1 28.8
USD billones 30 21.0 20 13.2 9.2 7.2 7.8 10 6.1 7.0 6.4 6.7 6.6 1.9 0.5 0 -1.5 -2.9 -10 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* 2021* Exports Imports Trade Balance
*December 2020 Inflation Report Source: Central Reserve Bank of Peru (BCRP) Background 36 1 Information
TRADITIONAL AND NON-TRADITIONAL EXPORTS IN USD BILLIONS
40 35.9 35.9 36.9 33.4 31.6 27.9 35.6 33.7 30 27.7 26.1 21.8 23.3 20.7 23.4 28.9 20 13.2 13.7 15.0 11.7 11.9 10.2 11.2 11.1 10.9 10.8 10 6.3 7.6 6.2 7.7 13.1 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* 2021* Non-traditional Traditional
*December 2020 Inflation Report Source: Central Reserve Bank of Peru (BCRP)
EXPORTS BY ECONOMIC SECTOR, AS OF NOVEMBER 2020 (INTERANUAL VARIATION %)
-40.2%
-54.8% Miscellaneous (including Jewelry)
-25.6% Hides and Skins Wood and Paper -12.2% Handcrafts -28.1% Non-Metallic Mining -29.3% Iron and Steel -19.8% Metalworking -5.3% Chemicals -19.4% Fisheries
-27.5% Textiles
8.2% Agriculture and Livestock Agricultural* -2.9% Oil and Byproducts* -58.4% Fisheries* -22.7% Mining* -15.0%
-80% -60% -40% -20% 0% 20%
*Traditional Source: National Superintendency of Customs and Tax Administration (SUNAT) Background 37 1 Information
IMPORT OF CONSUMER GOODS ACCORDING TO CUODE, AS OF NOVEMBER 2020 (INTERANUAL VARIATION %)
Transportation Equipment 2.7% Capital Goods for Industry -25.1% Capital Goods for Agriculture -48.2% Construction Materials 4.3% Raw Materials and Intermediate -11.5% Goods for Industry
-19.0% Raw Materials and Intermediate Goods for Agriculture -3.7% Fuels, Lubricants, and -10.9% Related Goods
-33.1% Durable Consumer Goods Nondurable Consumer Goods
-50% -40% -30% -20% -10% 0% 10%
Source: National Superintendency of Customs and Tax Administration (SUNAT)
EXPORTS BY TRADING PARTNER IN USD THOUSANDS – TOP TEN PARTNERS AS OF NOVEMBER 2020 (THOUSANDS OF USD)
China 9,861,811 United States 5,585,309 Canada 2,137,280 South Korea 1,959,282 Japan 1,606,575 Netherlands 1,300,545 Switzerland 1,218,703 Spain 983,143 Chile 968,524 India 968,181
2,000 4,000 6,000 8,000 10,000
Source: National Superintendency of Customs and Tax Administration (SUNAT) Background 38 1 Information
IMPORTS BY TRADING PARTNER– TOP TEN PARTNERS AS OF NOVEMBER 2020 (THOUSANDS OF USD)
China 6,955,874 United States 4,760,327 Brazil 1,394,838 Argentina 1,206,394 Mexico 1,029,903 Chile 764,120 Germany 746,345 Colombia 710,398 India 576,261 Canada 582,655
2,000 4,000 6,000 8,000
Source: National Superintendency of Customs and Tax Administration (SUNAT)
ECONOMIC RESULTS (TAX SURPLUS / DEFICIT) OF THE NON-FINANCIAL PUBLIC SECTOR (AS A PERCENTAGE OF THE GROSS DOMESTIC PRODUCT – GDP)
2.9 3 2.4 2.1 2.3 2 1 0.9 0 -0.2 -1 -0.3 -1.3 -2 -1.6 -2.0 -3 -2.5 -2.5 -3.1 -4 -5 -4.4 -6 -7 -8 -9 -8.9 -10 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021*
*December 2020 Inflation Report Source: Central Reserve Bank of Peru (BCRP) Background 39 1 Information
PUBLIC SPENDING IN PERU (PERCENTAGE CHANGE)
16 15.9 14 12.5 11.8 14.7 15.9 12 13.3 12.0 12.4 12.6 10 8 7.7 8.4 6.0 6 3.6 4 2.5 2 1.0 0 0.1 -2 -0.5 -1.2 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* 2021*
*December 2020 Inflation Report Source: Central Reserve Bank of Peru (BCRP)
In 2019, the central government's tax revenues than that collected in 2019, which is the result of totaled PEN110.7 billion. However, in 2020 they a contraction in the economic activity due to the reached PEN93.1 billion, an amount 17.4% lower immobilization measures to face COVID-19.
TAX BURDEN (AS A PERCENTAGE OF THE GROSS DOMESTIC PRODUCT – GDP)
20 16.9 16.4 16.8 16 15.6 15.7 14.8 15.5 15.2 14.8 13.8 14.4 14.5 14.1 13.4 13.4 12
8
4 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* 2021*
*December 2020 Inflation Report Source: Central Reserve Bank of Peru (BCRP) / National Superintendency of Customs and Tax Administration (SUNAT)
TAX BURDEN IN LATIN AMERICA AND THE CARIBBEAN 2019 (AS A PERCENTAGE OF THE GROSS DOMESTIC PRODUCT – GDP)
Peru 14.8
Ecuador 20.6
Latin America and the Caribbean 23.2
Chile 21.1
Colombia 19.4
Venezuela 14.4
10 20 30
Source: 2021-2024 Multiannual Macroeconomic Framework (MEF), December 2020 Inflation Report (Central Reserve Bank of Peru – BCRP) Background 40 1 Information
PUBLIC DEBT (AS A PERCENTAGE OF THE GROSS DOMESTIC PRODUCT – GDP)
50 46.0
40 9.6 32.3 35.1 34.4 30 9.0 24.9 25.7 26.8 15.0 13.6 23.3 23.9 19.9 19.2 19.9 8.5 20 8.8 8.9 36.4 10.4 9.8 8.8 8.8 11.1 10 23.2 20.1 20.8 16.1 16.8 18.3 10.1 10.4 11.1 12.2 13.5 2000 2006 2012 2013 2014 2015 2016 2017 2018 2019 2020* 2021* Domestic Non-Domestic
*December 2020 Inflation Report Source: Central Reserve Bank of Peru (BCRP)
TOTAL PUBLIC DEBT IN 2020* IN LATIN AMERICA (AS A PERCENTAGE OF THE GROSS DOMESTIC PRODUCT – GDP)
Peru 35.1
Latin America and the Caribbean 79.3
Mexico 65.5
Brazil 101.4
20 40 60 80 100 120
*Estimated Source: Central Reserve Bank of Peru (BCRP), World Economic Outlook, October 2020 (FMI)
DEBT OF NON-FINANCIAL PUBLIC SECTOR (AS A PERCENTAGE OF THE GROSS DOMESTIC PRODUCT – GDP)
40 34.1 35.1 34.4 29.9 30 26.9 27.2 25.8 25.2 24.9 26.8 24.0 24.3 23.3 23.8 21.6 22.5 19.9 19.9 20 18.0 19.2 14.1 14.3 13.0 12.2 11.3 9.5 10 7.6 6.8 3.9 5.4 2.7 3.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* 2021*
Gross Debt Net Debt
*December 2020 Inflation Report Source: Central Reserve Bank of Peru (BCRP) Background 41 1 Information
Peru has been positively rated by the best-known Recently, an increasing number of multinational risk rating agencies, thereby ratifying the country's corporations have been looking at Peru with investment grade. The factors that support this greater interest. The subsequent increase in jobs rating are the solid economic prospects reflected and decrease in poverty will predictably help COUNTRY by a 2.2% rise in the Gross Domestic Product (GDP) improve social welfare. 6 in 2019 and an estimated economic recovery RISK AND of 11.5% in 2021 (based on the forecasts of The progress made in watching out for the tax INVESTMENT December 2020). These economic forecasts are results, the promotion of investment in important backed by the rapid growth in investments and the job creation sources (such as infrastructure, GRADE significant drop in tax and external vulnerabilities, mining, hydrocarbons and telecommunications) thus attaining growth with low inflation rates and the implementation of tenders as a specific strong macroeconomic policies. As a result Peru “countercyclical” measure in response to the has obtained the investment grade and attracted economic slowdown, as well as the measures taken international attention. to modify the tax system included in Sections 5 and 6 of this Guide (Taxes and Labor System, respectively) allow us to observe how Peru channels its development towards improving its investment grade.
PERU'S INVESTMENT GRADE RATINGS
Country S&P Fitch Moody's S&P / Fitch Moody's Feature Chile A+ A- A1 AAA Aaa Risk Free Peru BBB+ BBB+ A3 AA+, AA, AA- Aa1, Aa2, Aa3 High Grade Mexico BBB BBB- Baa1 High Repayment A+, A, A- A1, A2, A3 Colombia BBB- BBB- Baa2 Capacity Uruguay BBB BBB- Baa2 BBB+, BBB, Baa1, Baa2, Moderate BBB- Baa3 Repayment Capacity Paraguay BB BB+ Ba1 Some Repayment Bolivia B+ B B2 BB+, BB, BB- Ba1, Ba2, Ba3 Capacity Brazil BB- BB- Ba2 Highly Uncertain B+, B, B- B1, B2, B3 Argentina CCC+ CCC Ca Repayment Capacity Ecuador B- B- Caa3 Extremely CCC+, CCC, Caa1, Caa2, Vulnerable to Venezuela SD WD C CCC-,CC Caa3 Default As of December 2020 Source: Standard & Poor's / Fitch Ratings / Moody's SD/RD C Default
Source: Bloomberg Background 42 1 Information
EVOLUTION OF THE LONG-TERM DEBT RATING IN FOREIGN CURRENCY
Agency 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Fitch BB+ BBB- BBB- BBB- BBB BBB BBB+ BBB+ BBB+ BBB+ BBB+ BBB+ BBB+ BBB+ S&P BB+ BBB- BBB- BBB- BBB BBB BBB+ BBB+ BBB+ BBB+ BBB+ BBB+ BBB+ BBB+ Moody's Ba2 Ba1 Baa3 Baa3 Baa3 Baa2 Baa2 A3 A3 A3 A3 A3 A3 A3
Source: Standard & Poor's / Fitch Ratings / Moody's
RISK RATING OF THE REGION ACCORDING COUNTRY RISK (EMBIG) TO MOODY'S As of December 31, 2020, Peru had a country risk of 143 base points,the lowest in Latin America. A1 Chile This score is almost the third part of the regional average (407 points). A3 Peru Additionally, in early January 2018, Bloomberg
Baa1 Mexico Markets positioned Peru as the ninth emerging Baa1 market with the greatest international projection, based on the country's advantages, such as low Baa2 Colombia prices of shares of stock and their possible increase Ba1 in the future. Ba2 Brazil
B1 As may be seen in the following charts, Peru's level of inflation is one of the lowest in Latin America, with a rate of 1.9% in 2020, and an estimated target B3 Ca Argentina range below 3% for 2021. In addition, over the past decade, the Peruvian economy had the lowest
Caa1 average annual inflation rate in Latin America, at 2.5%, below that of Chile (3.1%) Colombia (3.8%) 1999 2020* and Brazil (5.8%). *As of December 2020 Source: Moody's Background 43 1 Information
COUNTRY RISK INDICATOR - EMBIG (IN BASE POINTS)
4,000 Argentina 3,500 1,390 Latin America 3,000 407
2,500 Mexico 392
2,000 Brazil 255 1,500 Colombia 210 1,000 Chile 147 500 Peru 0 143 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*
*As of December 2020 Source: Central Reserve Bank of Peru (BCRP)
ESTIMATED INFLATION RATES IN LATIN AMERICA (IN PERCENTAGE)
1.9 Peru 1.9 1.5
4.3 Brazil 2.0 2.9
3.0 Chile 2.4 2.9
2.8 Mexico 3.7 2.9
3.8 Colombia 1.4 2.4
8.8 Uruguay 9.5 7.5
2 4 6 8 10 12 2019 2020* 2021*
*Estimate. World Economic Outlook Database, October 2020. For Peru, forecasts are based on the December 2020 Inflation Report. Source: International Monetary Fund (IMF) / Central Reserve Bank of Peru (BCRP) Business 44 2 Environment
BUSINESS ENVIRONMENT 2 Business 45 2 Environment
LEGISLATION AND TRENDS IN FOREIGN FAVORABLE LEGAL FRAMEWORK FOR INVESTMENT IN PERU FOREIGN INVESTORS
Peru seeks to attract both domestic and foreign Peru offers a legal framework1 that protects foreign INVESTMENT investment in all sectors of the economy. To achieve investors' interests by offering them: 1 this, it has taken the necessary steps to establish PROMOTION a consistent investment policy that eliminates any • An equal and non-discriminatory treatment CONDITIONS barriers that foreign investors may face. As a result, • Unrestricted access to the majority of economic Peru is considered a country with one of the most sectors open investment systems in the world. • Free capital transfer
Peru has adopted a legal framework for investments that requires no previous authorization for foreign Additionally, Peruvian and foreign investors are investment. In this regard, foreign investments are provided with: allowed without restrictions in the large majority of economic activities. The activities with restrictions • Right to free competition are very specific, such as air transportation, sea • Guarantee of private property (no expropriations transportation, private safety and surveillance and or nationalizations) the manufacture of war weaponry. • Freedom to acquire shares in Peruvian corporations Additionally, Peru has a legal framework to protect • Freedom to access internal and external credit the economic stability of investors and to reduce government interference in economic activities. The • Freedom to transfer royalties and profits from Peruvian Government guarantees legal stability to their investment national and foreign investors with regard to the • Simplicity for most operations, whether in local legislation governing income tax and specifically, currency (Sol) or U.S. Dollars, without foreign distribution of dividends. Foreign investors with exchange controls. the right to obtain legal and tax stability are those • A country with a vast network of investment willing to invest in Peru for a period of no less than agreements and membership in the Investment two years and for a minimum amount of USD10 Committee of the Organization for Economic Co- million in the Mining and/or Hydrocarbons sectors, operation and Development (OECD) or USD5 million in any other economic activity. Direct foreign investments must be registered with Peru's legal provisions, regulations, and practices the Agency for the Promotion of Private Investment do not discriminate between domestic and (ProInversión). foreign corporations. There are no restrictions on repatriation of profits, international transfers Foreign investors may remit abroad the net profits of capital, or foreign exchange practices. The (without any restriction whatsoever) from their remittance of interest and royalties is also not registered investments, as well as transferring their restricted in any way. Foreign currency may be shares, ownership interests, or participatory rights, allocated to acquire goods abroad or cover financial perform capital reductions, and dissolve or wind-up obligations, provided the operator complies with their companies. Peruvian tax laws.
1 Constitutional provisions; “Foreign Investment Act,” Legislative Order (Decreto Legislativo) 662; “Framework Law for the Growth of Private Investment,” Legislative Order 757; as amended, and Regulations thereof. Taken from ProInversión. Business 46 2 Environment
RECOGNITION OF FAVORABLE INVESTMENT CLIMATE
According to the Global Competitiveness Index ranking, Peru is among the top countries in Latin America in terms of macroeconomic framework, health, market size, goods market, and financial system.
2018 2019 Ranking Score Ranking Score Peru Total 63/140 61.3 65/141 61.7
Basic Requirements 64 64.1 70 64.2 Institutions 90 50.2 94 48.9 Infrastructure 85 62.4 88 62.3 Information Technologies 94 43.9 98 45.7 Macroeconomic Framework 1 100.0 1 100.0 Human Capital 43 75.5 44 77.4 Health 32 93.3 19 94.6 Skills 83 58.6 81 60.2 Markets 48 60.1 51 59.9 Goods 50 59.5 56 57.1 Labor 72 58.8 77 59.0 Financial System 63 60.5 67 61.4 Size 49 61.6 49 62.2 Innovation Ecosystem 93 43.2 94 44.3 Business Sophistication 92 54.5 97 55.8 Innovation Capacity 89 31.9 90 32.7
Source: Global Competitiveness Index 2019. World Economic Forum Business 47 2 Environment
BUSINESS FACILITIES IN PERU
According to Doing Business 2020, Peru ranks 76th out of 190 countries in terms of readily available facilities to startup a company and of doing business, ranking sixth among the countries of Latin America. According to Forbes 2019, Peru ranks 64th among the best countries in the world for doing business, and fifth in Latin America.
DOING BUSINESS FORBES
Ranking for Latin America Best Countries for Doing Business Position Country Position Country 59 Chile 33 Chile 60 Mexico 48 Costa Rica 65 Puerto Rico (United States) 54 Mexico 67 Colombia 58 Uruguay 74 Costa Rica 64 Peru 76 Peru 67 Colombia 86 Panama 73 Brazil 91 El Salvador 75 Panama 96 Guatemala 76 Argentina 101 Uruguay 91 Dominican Republic 115 Dominican Republic 97 Guatemala
Source: World Bank (WB) - Doing Business 2020 Source: Forbes 2019 Business 48 2 Environment
The following are the principal indicators for the investment climate: Indicators Peru Latin America and the Caribbean Starting a business • Number of procedures 8.0 8.1 • Time (days) 26.0 28.8 • Cost (% of per capita income) 9.4 31.4 • Registration of minimum paid up capital (% of per capita income) 0.0 0.4 Construction permits • Number of procedures 19.0 15.5 • Time (days) 137.0 191.2 • Cost (% of per capita income) 1.7 3.6 Property registration • Number of procedures 6.0 7.4 • Time (days) 9.5 63.7 • Cost (% of property value) 3.9 5.9 Electricity service • Number of procedures 6.0 5.5 • Time (days) 67.0 66.8 • Cost (% of per capita income) 448.5 407.2 Access to credit • Strength of legal rights index (0-12) 7.0 5.3 • Depth of credit information index (0-8) 8.0 5.1 • Coverage of Public Records Offices (% of adults) 39.4 14.6 • Coverage of private entities (% of adults) 100.0 47.6 Protecting minority investors • Interest regulation index (0-10) 9.0 4.1 • Minority investor protection index (0-10) 6.0 3.0 Paying taxes • Number of tax payments per year 8.0 28.2 • Time (hours per year) 260.0 317.1 • Total tax rate (% of profit) 36.8 47.0 Trading across borders • Time to export: compliance with border regulations 24.0 35.7 • Export costs: compliance with border regulations (USD) 50.0 100.3 • Time to import: compliance with border regulations (hours) 48.0 55.3 • Import costs: compliance with border regulations (hours) 630.0 516.3 Enforcing contracts • Time (days) 478.0 774.2 • Cost (% of amounts claimed) 41.2 32.0 • Legal proceedings quality index (0-18) 9.5 8.8 Bankruptcy resolution proceeding • Time (years) 3.1 2.9 • Cost (% of assets) 7.0 16.8 • Recovery rate (cents per USD) 31.3 31.2
Source: World Bank (WB) - Doing Business 2020 Business 49 2 Environment
GLOBAL COMPETITIVENESS RANKING 2020
Country 2016 2018 2020 Raking by Factors for Peru 2016 2018 2020 Chile 36 35 38 Financial Performance 50 55 51 Peru 54 54 52 Government Efficiency 41 47 40 Mexico 45 51 53 Business Efficiency 50 51 50 Colombia 51 58 54 Infrastructure 59 61 60 Brazil 57 60 56 Argentina 55 56 62 Venezuela 61 63 63
Source: Institute for Management Development (IMD), Centrum Católica
FINANCIAL CLIMATE INDEX OF LATIN AMERICA BUSINESS CLIMATE INDEX (BCI) IN THE FOLLOWING COUNTRIES Financial Climate Index is the result of the Latin Position Country ICE American Financial Survey, carried out by the 1 Paraguay -14.8 IFO Institute of Germany and the Getúlio Vargas 2 Uruguay -21.4 Foundation of Brazil. This survey is prepared every three months and serves for the monitoring and 3 Colombia -28.5 anticipation of the financial tendencies of the 4 Peru -29.7 countries and financial blocs. 5 Chile -30.9 6 Brazil -32.8 As of the fourth quarter of 2020, Peru reached 7 Argentina -41.0 -29.7 points, exhibiting a substantial recovery that 8 Bolivia -41.9 exceeded the average for Latin America. 9 Mexico -50.0 10 Ecuador -53.6 Latin America -39.3
Source: Latin American Business Survey - IFO Institute, Getúlio Vargas Foundation, Third Quarter of 2020
BUSINESS CLIMATE INDEX IN LATIN AMERICA
0
-20 -14.8 -21.4 -27.5 -32.0 -30.9 -28.5 -29.7 -40 -32.8 -35.7 -35.6 -34.8 -39.3 -38.0 -43.2 -41.0 -41.9 -41.9 -50.0 -60 -53.6 -60.0 -65.2 -80
-100 -93.9 2.9 -120 Latin Argentina Bolivia Brazil Chile Colombia Ecuador Mexico Paraguay Peru Uruguay America Third Quarter of 2020 Fourth Quarter of 2020
Source: Latin American Business Survey - IFO Institute, Getúlio Vargas Foundation, Third Quarter of 2020 Business 50 2 Environment
INDEX OF ECONOMIC FREEDOM ENTREPRENEURSHIP
According to the 2020 Index of Economic Freedom The Global Entrepreneurship Monitor (GEM) is the prepared by The Heritage Foundation, which largest study worldwide aimed at investigating includes an analysis of the environment and the attitudes, activities and characteristics of the economic freedom of each country based on ten individuals who participate in entrepreneurial indicators covering issues such as compliance activities, as well as the impact of entrepreneurship with the law, the level of government intervention, in the economic development of the countries. market openness, and efficient State regulations, This study divides the countries into three blocs: the overall results obtained confirm that promoting resource-based economies, efficiency-based economic freedom in terms of the rule of law, economies and innovation-based economies. Each government, regulations, and open markets one of these blocs shows the country's performance generates a broad economic dynamism. Thus, in terms of its economic development; in other boosting these levels will prove significant in order words, the countries with low income that base their to sustain the wealth of nations, as well as being the economy on the extraction of natural resources are most effective way to eradicate poverty. located in the first bloc. The developed countries are situated between the innovation-based Below is a summary of this ranking: economies and medium income countries, such as Peru, within the efficiency-based economies. Latin Worldwide 2020 Country American Ranking Score The Global Entrepreneurship Monitor (GEM) defines Ranking the Entrepreneurial Activity Rate (EAR) as the Singapore 1 - 89.4 number of entrepreneurial ventures among the China, Hong economically Active Population (PEA). In addition, 2 - 89.1 Kong it shows other results such as the perception of New Zealand 3 - 84.1 opportunities, of capacities, the fear of failure Canada 9 - 78.2 and entrepreneurial intentions, obtained from Chile 15 1 76.8 the surveys carried out on entrepreneurs of each Colombia 45 2 69.2 country. 47 3 Uruguay 69.1 WORLDWIDE RATE OF ENTREPRENEURIAL Peru 51 4 67.9 ACTIVITY 2018/2019 Mexico 67 - 66.0 Rate of Paraguay 80 5 63.0 Entrepreneurial Countries Entrepreneurial Brazil 155 6 53.7 Intentions (%) Activity Argentina 149 7 53.1 Angola 40.8 79.8 Ecuador 158 8 51.3 Guatemala 27.5 49.7 Bolivia 175 9 42.8 Chile 25.1 48.7 Venezuela 179 10 25.2 Lebanon 24.1 29.1 Source: The Heritage Foundation Peru 22.4 39.7 Sudan 22.2 66.7 Colombia 21.2 48.8 Madagascar 20.7 32.6 Thailand 19.7 31.5 Canada 18.7 14.5
Source: Global Entrepreneurship Monitor (GEM) Business 51 2 Environment
INSIGHT, APPRAISALS, AND BUSINESS INTENT BY COUNTRY, 2018-2019 GEM
Opportunity to Do Ease of Starting a Entrepreneurial Country Business in the Next Fear of Failure Business Capabilities 6 Months Argentina 35.9 23.4 48.8 31.9 Chile 61.8 36.5 62.5 28.6 Panama 39.0 45.3 42.1 19.4 Uruguay 28.9 19.8 59.0 27.4 Brazil 31.4 - 54.3 32.6 Colombia 57.5 39.2 66.4 23.1 Guatemala 54.6 35.7 65.2 30.3 Peru 56.0 52.6 71.8 30.2 Average 45.6 31.6 58.8 27.9
Source: Global Entrepreneurship Monitor (GEM)
In 2018, Peru obtained an Entrepreneurial Activity Rate (EAR) of 22.4%, thereby situating it among the top ten entrepreneurial countries of the world. According to the Index of the Global Entrepreneurship Monitor (GEM) 22 out of every 100 Peruvians carry out an entrepreneurial activity mainly in microenterprises.
EVOLUTION OF THE RATE OF ENTREPRENEURIAL ACTIVITY IN PERU
30 28.8 25.9 27.2 25.6 25.1 25 24.6 22.9 22.4 23.4 20 22.2 20.9 20.2 15
10
5 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: Global Entrepreneurship Monitor (GEM) Business 52 2 Environment
1. Promotion for Private Investment a. The Peruvian Constitution The Peruvian Constitution establishes the Since 1993, the Peruvian Government has principles to incentivate private investment been striving to promoted national and foreign through the following key provisions: PROMOTION private investment. This journey begins with the MECHANISMS2 FOR Peruvian Constitution (1993), the backbone to • Peruvian and foreign investments are subject incentivate and guarantee private investment to the same conditions. As a result of this INVESTMENT IN through one of the most attractive legal constitutional provision, none of the laws, INFRASTRUCTURE frameworks in the region. regulations, and practices in force in Peru AND UTILITIES discriminate between Peruvian and foreign One of the fundamental principles of investment corporations. promotion under Peruvian law is the principle of • Property rights are guaranteed by the non-discrimination of foreign and local (Peruvian) Peruvian Government. For further details, investors. No one may be deprived of their property, EY, the Ministry of Foreign Affairs (MRE) Peru seeks to attract both domestic and foreign except for reasons of national security or and ProInversión investment in all sectors of the economy. To public necessity established by law, and with have compiled the achieve this, it has taken the necessary steps a prior cash payment to the owner of the Guide to Investing to establish a consistent investment policy that property in accordance with the appraised in Infrastructure eliminates any barriers that foreign investors value, which shall include compensation for Projects in Peru.. may face. As a result, Peru is considered a potential damages. country with one of the most open investment All foreign persons and/or entities shall You can download systems in the world. receive the same treatment as Peruvians. this Guide for free Peru has adopted a legal framework that requires However, within a radius of fifty (50) here. no previous authorization for foreign investment. kilometers from all national borders, In this regard, foreign investments are allowed foreigners may not acquire or possess, with certain restrictions in most economic under any title, either directly or indirectly, activities. Those activities subject to restrictions mines, land, forests, water, fuel or energy are very specific. Furthermore, Peru has a legal sources, whether individually or as part of framework designed to protect the economic a partnership, under penalty of losing such stability of investors and to reduce government possessions to the Peruvian Government. interference in economic activities. The sole exception to this provision are cases of public necessity, expressly established by Executive Order. Business 53 2 Environment
• The Peruvian Government guarantees the • Freedom to transfer profits from their free possession and disposal of foreign investments in Peru abroad and to pay currencies. As such, there are no restrictions royalties to non-domiciled entities on the remittance of profits, international • Simplicity of most transactions, whether in capital transfers, or foreign exchange local currency (Sol) or United States dollars, practices. without exchange controls • Private economic initiative is free. The main laws and regulations regarding the • Freedom of contract guarantees that the promotion of foreign private investment are: parties can negotiate in accordance with the rules in force at the time they enter into the • Legislative Order (Decreto Legislativo) contract. The terms and conditions of the 662—the Legal Stability Regime for Foreign contract cannot be amended by laws or any Investments: other provision. Under this law, the Peruvian Government incentivizes and provides guarantees to b. Regulations and Standards that Incentivize foreign investors in all sectors of economic Private Investment activity and any of the commercial or contractual forms permitted by national law. The Peruvian Constitution is not the only body of laws that incentivizes private investment. • Legislative Scheme 757—Legal Framework Peru offers a favorable legal framework that for the Growth of Private Investment: protects the interests of foreign investors by offering them: This law seeks to guarantee free initiative and private investments, whether already • Equal, non-discriminatory treatment made or to be made in the future, in all • Unrestricted access to most economic sectors of economic activity. It establishes sectors rights, guarantees, and obligations applicable to all individuals or entities, whether • Free capital transfer Peruvian or foreign, who invest in Peru. Additionally, Peruvian and foreign investors have: •The right to fair competition • Guarantee of private property (no expropriations or nationalizations) • Freedom to acquire shares of stock in Peruvian corporations • Freedom to gain access to internal and external credit Business 54 2 Environment
2. Public-Private Partnerships (PPP) b. PPP Phases
A Public-Private Partnership (PPP) is a form PPPs are carried out in five phases, as of participation in private investment that described below: involves experience, knowledge, equipment, technology, and the distribution of risks and 1. Planning and Programming resources, preferably private, for the purpose Takes the form of the Multiannual PPP of creating, developing, upgrading, operating, Investment Report (IMIAPP). or maintaining public infrastructure; providing public utilities and/or providing services related 2. Drafting to those required by the government, as well Project design and/or evaluation. Drafting as the development of applied research and/or of the Evaluation Report. technological innovation projects. 3. Structuring a. Legal Framework Approval of the Promotion Plan, inquiries with institutions, and design of the PPP Public-Private Partnerships (PPP) and agreement. Private Initiatives are generally governed by the provisions of (i) Legislative Order 4. Transaction 1362 (hereinafter, the “PPP Act”); and (ii) Public tender or comprehensive project the Regulations on the PPP Act approved by bidding process or other competitive Executive Order 240- 2018-EF (hereinafter, process. This phase concludes with the the "Regulations on the PPP Act"). This legal execution of the PPP agreement. framework is applicable to all entities in the non-financial public sector, at all levels of 5. Contractual Performance government. Project investment, operation, and maintenance phase. Includes monitoring It is important to note that a PPP can be and supervision of contractual obligations. implemented through either government or private initiatives (the latter of which is also known as an unsolicited proposal).
PPPs allow the private sector to contribute experience, knowledge, equipment, and technology to the financing, construction, operation, and maintenance of public infrastructure. For its part, the government retains the property rights over the project's infrastructure, including the new facilities built by the private investor. Generally, after the contract expires, the property is transferred to the government. Business 55 2 Environment
c. PPP Types
PPPs may be self-financed or co-financed.
• Self-financed: PPP project with the ability to generate its own revenue that does not require government co-financing.
• Co-financed: APP project that requires government co-financing or the granting or taking out of financial or non-financial guarantees with a significant likelihood of co- financing requirements, where:
Guarantees Self-Financed Co-Financed Those guarantees that do not exceed Those guarantees that exceed 5% of the Financial 5% of the total capital expenditure or total capital expenditure or the total Guarantee the total project cost (if there are no project cost (if there are no expenditure expenditure activities). activities). The likelihood of a request for use of public resources is minimal or The referred likelihood exceeds the limit Non-Financial nonexistent, which means that the of 10% for any of the first five years of the Guarantee likelihood of using public resources does project guarantee period. not exceed 10% for any of the first five years of the project guarantee period.
PPPs may also be categorized based on their involvement in government and private initiatives (unsolicited tenders).
• Government initiatives: The government (through one of its different levels) identifies and launches a project.
• Private initiatives (unsolicited tenders): The private sector identifies and proposes the project to the government. Business 56 2 Environment
In private initiatives, the government evaluates d. PPP Advantages the proposal submitted by the private sector. First, the government checks whether the • The risks are assigned based on which party proposal has been drafted in accordance is in a better position to manage them. with the private initiative regulations. Then, if the private initiative is admitted • The provision of utilities to the public by the government, it will issue an opinion benefits from the experience of the private on whether said initiative is relevant and sector. consistent with the agency's plans. • By integrating the infrastructure operation Lastly, the agency may declare the project and maintenance under a long-term submitted through a private initiative to be of agreement, the private sector will have interest. In such case, the agency gives other sufficient incentives to design and build said companies 90 days to participate in a tender infrastructure efficiently. process with the company that submitted the private initiative. If 90 days pass and • Public infrastructure can be provided without there are no more companies, the company using government resources (in the case of that submitted the private initiative shall be self-financed PPPs), or, in the case of co- awarded the contract for the performance financed PPPs, the government's payments of the project without competing with third to the private sector for the construction of parties. the infrastructure are distributed over the long-term, given that the private sector will Private initiatives have two main benefits for finance the project. the private sector, specifically for the company that submits them:
• In the case of bidding processes opened by virtue of a tender offer, if a company submits a valid technical and economic bid, it shall have the right to match the bid that received first place. Subsequently, the submitter and the company that achieved first place may submit another bid as a tie-breaker.
• In case of bidding processes opened by virtue of a tender process, if the company submits a valid economic bid and the project is awarded to a third party, the submitter may be reimbursed for the costs of the private initiative up to 2% of the total project cost or total capital expenditure. Business 57 2 Environment
e. Role of the Authorities
Private Investment Promotion Body (OPIP) The public agency responsible for the operation, management, and allocation of a PPP project is the Private Investment Promotion Body (OPIP). Depending on the scope, the OPIP may be:
OPIP Scope • Multisector PPP projects under national jurisdiction originated by government initiative. • PPP projects under national jurisdiction originated by government initiative with a capital expenditure or a total project cost (in case of projects without an expenditure component) of more than forth thousand (40,000) Tax Units (UITs)1 (PEN172 million). • PPP projects under national jurisdiction originated by self-financed private ProInversión initiative. • PPP projects under the jurisdiction of public entities authorized by express law, originated by self-financed private initiative. • Projects at any level of government and projects under the jurisdiction of public entities authorized by express law, originated by self-financed private initiative. • Projects developed through the Competitive Dialogue mechanism. • Projects assigned to ProInversión by express legal provision. OPIP of the Projects not assigned specifically to ProInversión. respective Ministry OPIP of the respective Projects under its own jurisdiction involving more than one province. regional government OPIP of the respective Projects under its own jurisdiction. local government
Ministry of Economy and Finance (MRE) Other Authorities The Ministry of Economy and Finance (MEF) is Ministries (for projects within their specific the governing body and highest technical and sectors), Regulatory Agencies, and the regulatory authority of the PPP system. It is Comptroller General's Office of the Republic responsible for safeguarding and coordinating also have specific roles in the PPP system. compliance with the National Policy for the Promotion of Private Investment in PPPs.
1 A Tax Unit (UIT) is equivalent to PEN4,300 for 2020. Business 58 2 Environment
3. Projects in Assets (PA) 4. Tax-Deductible Works
This mechanism is used for the development of The Tax-Deductible Works regime is an effective those cases in which the private investor seeks corporate social responsibility tool that allows to perform a project on an asset property of the for the application, as a credit against corporate government, whether as owner, holder, lessor, income tax, of the amount of any projects or any other status permitted by law. However, undertaken by private companies on behalf of these projects shall be carried out without any regional governments, local governments, public commitment of government resources. universities, and the national government in a range of sectors (such as education, health, Private investment in assets property of the safety, tourism, agriculture, irrigation, culture, Peruvian state are promoted through the sanitation, athletics, and the environment, respective OPIP (which may belong to ministries, among others). regional or local governments), based on the following scenarios: This regime is a win-win, since the government wins with the construction or performance of the • Sale of assets, including total or partial transfer projects, the public's quality of life improves, and private companies directly improve their brand • Use, lease, usufruct, or any other form image as socially responsible enterprises through permitted by Peruvian law their involvement therein. The Peruvian legal framework on PAs is the same The Tax-Deductible Works regime consists of a as that applicable to PPPs, i.e., the PPP Act and private company's participation, together with the Regulations on the PPP Act. a government entity, in the development and performance of a public investment project. The main difference between a PPP and a PA is With the execution of an agreement (the that while in the former, the government may “Investment Agreement”), the private company use its own resources and there is an assignment undertakes to implement a public investment of risks between the private sector and the project in exchange for the recognition of its government, in the latter the private sector investment as an income tax credit. For such assumes all the risks tied to the project and the purpose, an investment certificate is issued, project can never use government resources. depending on whether the agreement is entered into with regional and local governments, public universities (Regional and Local Public Investment Certificate - CIPRL), or agreements with a national government entity (National Government Public Investment Certificate - CIPGN). Business 59 2 Environment
a. Legal Framework general public. This means that all Public Investment Projects must have a • Consolidated Text (TUO) of Law 29230 – social purpose. Act on Regional and Local Public Investment with Private Sector Participation, as approved Public Investment Projects can include all by Executive Order (Decreto Supremo) of the pre-investment studies, architecture 294-2018-EF. or engineering studies, construction • Consolidated Text (TUO) of the Regulations on of infrastructure, performance, and Law 29230 – Act on Regional and Local Public maintenance of works. Investment with Private Sector Participation, as approved by Executive Order 295-2018-EF. Operating expenses, replacement of assets, and third-party consultancy or advisory • Legislative Order permitting Petroperú, on an expenses shall not be considered part of the exceptional basis, to finance projects under budget of the Public Investment Project. Law 29230.
• Consolidated Text (TUO) of Law 30556 - • Public Investment Agreement Act Approving Extraordinary Provisions on This is an agreement entered into by the Disaster Response, and Authorizing and private company and the government entity, Expanding the Scope of Law 29230, as by virtue of which the private company approved by Executive Order 094-2018-PCM. undertakes to perform a given public • Consolidated Text (TUO) of the Regulations investment project. on Law 30556 - Act Approving Extraordinary Provisions on Disaster Response, and The private company may perform the Authorizing and Expanding the Scope of Law project directly, or it can enter into a 29230, as approved by Executive Order construction agreement with a builder to 003-2019-PCM. perform the project.
b. Public Investment Project Types There are two types of public investment projects: To better grasp the advantages offered by the Tax-Deductible Works regime, it is important to a) Government Initiative: After identifying a understand the following: need, the government entity formulates a Public Investment Project to address the • Public Investment Projects emerging necessity. Public Investment Projects consist of the provision of government funds to create, b) Private Initiative (unsolicited proposal): expand, improve, or recover the production The private sector submits a Public or supply of goods and services for the Investment Project proposal, which must be evaluated by the government entity. Business 60 2 Environment
c. Advantages of the Tax-Deductible Works For 2020, public universities have a joint Regime annual capacity limit for investment in the Tax-Deductible Works regime equal to PEN948 This regime offers a number of benefits, such million (approximately USD270 million). The as the following: annual capacity limit of each university can be found at web obras por impuestos. • From a private-sector perspective: It strengthens the development of social Usually, according to Legislative Order 1275, responsibility programs, improving entities must meet certain mandatory tax companies' reputations and thus their provisions. However, due to the current relationship with the community COVID-19 pandemic, Emergency Decree 081- • For the community: This regime reduces the 2019 has suspended compliance with these infrastructure gap and creates more jobs. It tax provisions, on a temporary, exceptional also increases the coverage of utilities and basis, for fiscal year 2020. public services. • From the government's perspective: This e. Regional and Local Public Investment regime contributes to the acceleration of Certificate (CIPRL) and National Government projects Public Investment Certificate (CIPGN)
Issuing of Certificates (CIPRL and CIPGN) d. Annual Capacity Limit
Approval of reception and quality is required For 2020, regional governments have a joint to issue a CIPRL or a CIPGN. annual capacity limit for investment in the Tax- Deductible Works regime equal to PEN3.748 If the performance of the project takes more billion (approximately USD1.07 billion). than five months, the private company The annual capacity limit of each regional may ask the public entity to issue quarterly government can be found at web obras por certificates. impuestos.
CIPRLs are limited to the canon resources For 2020, local governments have a joint received by all regional and local governments, annual capacity limit for investment in the Tax- as well as public universities, which are Deductible Works regime equal to PEN11.322 published by the Ministry of Economy and billion (approximately USD3.228 billion). The Finance (MEF). CIPGNs are limited to the annual capacity of each local government can ordinary resources of the national government be found at web obras por impuestos. signing the agreement. Business 61 2 Environment
The canon is the share of local and regional • If the certificate is not used within ten governments in the total revenues received by years, the private company may request a the Peruvian Government for the economic reimbursement from the Tax Administration exploitation of natural resources. Currently, • Certificates are negotiable, which means Peruvian law regulates the concepts of mining they can be transferred to third parties, canon, hydropower canon, gas canon, fishing except when the private company that canon, forestry canon, and oil canon. signed the Investment Agreement has performed the works directly as builder It should be noted that the canon is the basis for determining the annual capacity limit for 5. Government-to-Government (G2G) investments under the Tax-Deductible Works Agreements regime for regional and local governments and public universities. Under G2G agreements, one government hires the supply of goods and services (including Certificate Characteristics (CIPRL and construction) through a direct agreement with CIPGN) another government. The latter government may perform the agreement through its own bodies These certificates have the following or agencies, government-owned companies, characteristics: national privately-owned companies, and/or foreign privately-owned companies. • CIPRLs and CIPGNs requested by government entities are issued electronically The most representative of these agreements, via the document security printing platform in terms of investment and the closing of social found at the following internet address gaps, is the Agreement for Reconstruction with dirección electrónica. Changes (RCC) entered into with the United • CIPRLs and CIPGNs can only be used for Kingdom. Through this G2G, Peru will receive advance tax payments on annual corporate technical assistance, supervision, and Project income Managers Officer (PMO) services from the • CIPRLs and CIPGNs can be used for up to Government of the United Kingdom2, which will 50% of the corporate income tax paid in the act through its “performance team”: privately- previous fiscal year owned companies from the United Kingdom with • If the CIPRLs or CIPGNs are not used by the extensive experience in the field. end of the year, the private company may request a new certificate, which shall include Peru has also recently signed many agreements the amount of the previous certificates under the government-to-government (G2G) plus a 2% increase. These new certificates regime with countries with extensive, proven may also be requested when there are experience in the infrastructure sector. outstanding credits or balances as a result of partially used certificates.
2 In 2017, there was a flood in northern Peru (a Coastal El Niño) that caused serious harm to the local population and infrastructure. The government created the Authority for Reconstruction with Changes (ARCC) to supervise and perform public works, which include important preventive measures. Business 62 2 Environment
a. Legal Framework Additionally, the NEC3 promotes the delivery of projects: Law 30556, approving extraordinary (i) On time provisions for national government (ii) Within budget; and, interventions in case of disasters and 3 ordering the creation of the Authority for (iii) With the highest standards. . Reconstruction with Changes (ARCC), permits the ARCC and government ministries to According to Peruvian experience with enter into G2G agreements for complex and NEC3s, the main characteristics of this consolidated projects. type of contract are its straightforward language, appropriate risk allocation, and Legislative Order 1248, Section 4 also collaborative work. authorized the execution of G2G agreements in order to hire the management and provision of goods and/or services for the realization of the Lima 2019 Pan American and Parapan American Games Lima.
b. New Engineering Contract (NEC)
For the Lima 2019 Pan American and Parapan American Games, use was made of New Engineering Contracts (NECs), specifically NEC3s. NECs are highly flexible standard contracts created by the United Kingdom Institution of Civil Engineers (ICE) in England, similar to other standard contracts such as FIDICs, ICCs, and AIAs, among others.
In particular, NEC3s have been used for the provision of goods, services, and works, considering all phases in a project's cycle, from project planning, design, and management to facility construction, maintenance, and management.
3 https://www.neccontract.com/About-NEC/How-NEC-Contracts-Works Background 63 1 Information
In the period 2008-2019, ProInversión granted the concession of 108 projects, in the form of Public-Private Partnerships (PPP) and investment commitments totaling USD28.4 billion, a figure that INVESTMENT will contribute towards the dynamism of the main 3 economic sectors of the country. INDICATORS NUMBER OF PROJECTS 2008-2019
25 22 20
15 12 11 12 10 10 9 8 7 5 6 5 4 2 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: ProInversión
INVESTMENT COMMITMENTS 2008-2019 (IN USD MILLIONS)
12,000 9,979 10,000 8,000 6,000 4,543 3,949 4,000 2,101 1,619 2,051 2,000 671 789 912 528 926 346 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: ProInversión Background 64 1 Information
INVESTMENT PROJECTS - TARGETS OF 2021
Project in USD Millions Huancayo – Huancavelica Railway 263 AWS-3 and 2.3 GHz Bands 291 Mass Distribution of Natural Gas 200 Puerto Maldonado-Iberia Transmission Line 50 Milestone: Awarding of Valle del Chira Substation 11 Projects Piura Nueva-Frontera Transmission Line 163 USD2.554 Billion Puerto Maldonado Wastewater Treatment Plant 57 ESSALUD Chimbote 130 ESSALUD Piura 170 Headworks 480 Ancón Industrial Park 750 Ring Road 1,965 San Juan de Marcona Terminal Port 637 Milestone: Declaration Huancayo Wastewater Treatment Plant 165 of Interest Downtown High-Performance School 60 8 Projects Villa María del Triunfo At-Risk School 75 USD3.386 Billion Metropolitan Lima At-Risk School 227 Comas and San Martín de Porres At-Risk School 99 Ate and San Juan de Lurigancho At-Risk School 158 Total 5,940
Source: ProInversión (January 2021)
PRIVATE INVESTMENT (PERCENTAGE CHANGE)
30 25.9 25 23.9 20 17.5 15.6 15 11.0 10 6.5 5 4.5 4.0 0.2 0 -2.1 -5 -4.5 -5.4 -10 -9.1 -15 -20 -19.0 -25 -30 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021*
*December 2020 Inflation Report Source: Central Reserve Bank of Peru (BCRP) Background 65 1 Information
PUBLIC INVESTMENT (PERCENTAGE CHANGE)
40 32.9 30 27.9
20 19.1 14.2 12.1 14.0 10 5.6
0 -0.2 -2.0 -2.3 -1.4 -10 -7.5 -11.2 -20 -9.1
-30 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021*
*December 2020 Inflation Report Source: Central Reserve Bank of Peru (BCRP)
FIXED GROSS INVESTMENT t(AS A PERCENTAGE OF THE GROSS DOMESTIC PRODUCT – GDP)
28.6 30 28.1 27.4 25.7 25.6 5.7 25.1 23.2 22.6 5.4 5.5 22.6 5.7 4.8 23.1 22.4 22.4 4.2 4.8 21.3 20 5.4 4.6 4.4 4.2 4.1 20.5 4.2 4.2
22.7 22.9 21.9 10 19.0 20.0 20.8 20.3 18.2 18.5 17.2 18.5 18.0 16.3 17.1 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* 2021* Private Investment Public Investment
*December 2020 Inflation Report Source: Central Reserve Bank of Peru (BCRP)
The economic stimulus plan called "Arranca Perú" will have continuity during 2021, being already approved within the public budget of the year. This plan includes an investment estimated at PEN3.26 billion (approximately USD950 million).
The investment distribution is centered on 4 key sectors such as transportation, housing and sanitation, education and agriculture. Background 66 1 Information
SHORT- AND LONG-TERM INFRASTRUCTURE GAP (IN USD MILLIONS)
Short-Term Gap Long-Term Gap N° Industry PEN USD PEN USD 1 Water 6,019 1,818 24,245 7,325 2 Sanitation 28,819 8,707 71,544 21,615 3 Telecommunications 12,151 3,671 20,377 6,156 4 Transport 35,970 10,867 160,958 48,628 5 Electricity - 7,059 2,133 6 Education - 5,917 1,788 7 Health 27,545 8,322 58,727 17,742 8 Hydraulic 6,679 2,018 14,625 4,418 Total 117,183 35,403 363,452 109,804
Source: 2019 National Infrastructure Plan for Competitiveness – Ministry of Economy and Finance (MEF)
GROSS CAPITAL FORMATION (AS A PERCENTAGE OF THE GROSS DOMESTIC PRODUCT – GDP)
40
30 20.1 20
10 5.2 5.5 5.2 4.5 4.2 4.1 4.3 4.0 3.7 3.8 0
-10 -8.3
-20 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* 2021*
*December 2020 Inflation Report Source: Central Reserve Bank of Peru (BCRP)
BALANCE OF FOREIGN DIRECT INVESTMENT BY SECTOR IN USD MILLIONS 2019
Mining Commerce Sector In USD Millions 23.5% 3.2% Mining 6,257 Communications 5,330 Communications Oil 20.0% 2.6% Finance 4,785 Energy 3,486 Finance Services 18.0% 2.5% Industry 3,216 Commerce 851 Energy Others Oil 701 13.1% 5.0% Services 673 Industry Others 1,334 12.1% Total 26,636
Source: ProInversión Background 67 1 Information
FOREIGN DIRECT INVESTMENT FLOW (IN USD MILLIONS)
15,000 13,622
9,826 10,000 8,455 8,314 8,892 7,682 6,431 6,739 6,860 6,488
5,000 3,930 2,738 2,061 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* 2021*
*Estimate. December 2020 Inflation Report Source: Central Reserve Bank of Peru (BCRP)
FOREIGN DIRECT INVESTMENT IN LATIN AMERICA 2018 (IN USD MILLIONS)
Brazil 88,319
Mexico 36,871
Colombia 11,352
Peru* 8,892
Chile 6,082
Ecuador 1,408
Bolivia 316
10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000
*Peru (2019) Source: Foreign Direct Investment in Latin America and the Caribbean 2019. Economic Commission for Latin America and the Caribbean (CEPAL), Central Reserve Bank of Peru (BCRP) Background 68 1 Information
GLOBAL CAPITAL CONFIDENCE BAROMETER, 22ND EDITION – ERNST & YOUNG (EY)
The Global Capital Confidence Barometer, prepared by EY in March 2020, measures companies' confidence in the economic outlook and identifies trends and practices among boards of directors in terms of their management of capital plans.
This edition includes a before-and-after COVID-19 comparison.
WHAT IS YOUR PERSPECTIVE ON GLOBAL ECONOMIC GROWTH TODAY?
Before
47% 35% 18%
After 47% 35% 18%
Possible Stable Negative
WHAT IS YOUR OPINION ABOUT THE IMPACT OF COVID-19 TO THE GLOBAL ECONOMY?
73% 27%
Severe Impact Minor Impact
HOW WILL THE CORONAVIRUS PANDEMIA AFFECT YOUR DECISION ON:
Global Supply Chain Speed of Automation Digital Transformation Managing your Workforce
52% 36% 31% 39%
40% 41% 38% 35%
8% 23% 31% 26%
Steps are being taken to effect change A re-evaluation is needed No change Background 69 1 Information
HOW SIGNIFICANTLY WILL THE CORONAVIRUS OUTBREAK IMPACT ON YOUR PROFITABILITY AND MARGINS?
39% 56% 5%
Severe impact Minor impact No impact
UNDER WHAT ECONOMIC SCENARIO IS YOUR COMPANY CURRENTLY OPERATING?
38% 54% 8%
A return to normal A longer period of A sustained period of economic activity in the slower economic activity recession, with economic third quarter of 2020: extending into 2020: activity not recovering until a V shaped recovery a U shaped recovery 2020 at the earliest: an L shaped recovery
IS YOUR COMPANY CURRENTLY UNDERGOING A SIGNIFICANT BUSINESS AN TECHNOLOGY TRANSFORMATION PROGRAM?
If yes, what are the main triggers for your transformation?
Pressure on revenue targets and meeting profitability goals
20%
Increasing pressure from investors/shareholders
15%
Difficulty in attracting or retaining customers No Yes 28% 72% 15%
Not keeping up with competitors' technology
14%
The need to move into adjacent sectors
14%
Not keeping up with competitors' performance
13%
Falling market share
9% Background 70 1 Information
WHAT IS YOUR EXPECTATION FOR THE M&A MARKET IN THE NEXT 12 MONTHS?
82% 79%
18% 16% 5% 0%
On and before 19 February After 19 February
Improve Stay the same Decline
WHAT ARE THE MAIN STRATEGIC DRIVERS FOR PURSUING ACQUISITIONS?
31%
26%26% 27% 27% 24% 25% 24% 25% 23% 23% 19%
Acquiring Sector Response to Gateway technology, convergence/ regulatory or to new new production growth into tariffs and trade markets capabilities, or adjacent business changes/secure innovative startups activity supply chain
Peru Latam Global
Our complete “Global Capital Confidence Barometer” study can be found at here. Business 71 2 Environment
Peru's development strategy is based on an Switzerland, Thailand, the Belgium-Luxembourg economy opened to the world and competitive in Economic Union, the United Kingdom, and its export offer. It has been a successful strategy Venezuela. that has permitted the country to consolidate its TRADE foreign trade of goods and services as an economic Additionally, Peru has a total of 14 free trade 4 development and poverty reduction pool. agreements and economic integration agreements AGREEMENTS (TLCs & EIAs) in force with Canada, Costa Rica, International trade negotiations, which have the European Free Trade Association (EFTA), the benefited from rigorous macroeconomic European Union, Japan, Panama, Australia, Chile, management and its consequent stability, have China, Honduras, South Korea, Mexico, Singapore, allowed the Peruvian economy to gradually tackle and the United States. and reduce its external vulnerability in times of crisis such as in the current international and local Peru is currently in the midst of negotiations with context. Turkey, El Salvador, and India, and has concluded negotiations with Brazil, Guatemala, and the Trade agreements are a valuable tool to Comprehensive and Progressive Agreement for attract foreign direct investment and increase Trans-Pacific Partnership (with Australia, Brunei entrepreneurial productivity, as well as technology Darussalam, Canada, Chile, Japan, Malaysia, transfer thanks to the lower cost of importing Mexico, New Zealand, Singapore, and Vietnam) capital goods and high-quality inputs. These which includes the Trans-Pacific Partnership agreements foster the compliance of international Agreement standards, thus enabling more Peruvian companies to improve their management and logistic practices. Foreign investors are protected against Peru has been a member of the World Trade inconvertibility, expropriation, political violence, and Organization (WTO) since 1995, and in 1998 it other non-business risks via access to multilateral became a member of the Asia-Pacific Economic and bilateral agreements. Peru has signed an Cooperation Forum (APEC). In 2011, it formed the agreement with the Overseas Private Investment Pacific Alliance with Chile, Colombia, and Mexico. Corporation (OPIC) and the Convention Establishing It is also a member country of the Latin American the Multilateral Investment Guarantee Agency Integration Association (ALADI) and a member-state (MIGA). Peru has also entered into the World Bank's of the Southern Common Market (MERCOSUR). International Convention on the Settlement of Peru has begun to follow a Country Program to join Investment Differences (ICSID) as an alternative the Organization for Economic Cooperation and for the settlement of any disputes that may arise Development (OECD). This is a key tool to ensure between investors covered by the ICSID and the Peru's successful entrance into the organization. Peruvian Government.
Peru currently has in force 32 Bilateral Investment Eight double taxation avoidance agreements Treaties (BITs) with Argentina, Australia, Bolivia, have been signed with Chile, Canada, the Andean Canada, Chile, China, Colombia, Cuba, the Community (CAN), Brazil, Mexico, South Korea, Czech Republic, Denmark, Ecuador, El Salvador, Switzerland, and Portugal. In 2019, Peru also Finland, France, Germany, Italy, Japan, Malaysia, signed a double taxation avoidance agreement with the Netherlands, Norway, Paraguay, Portugal, Japan, which entered into force on January 29, Romania, Singapore, South Korea, Spain, Sweden, 2021 and will take effect from January 1, 2022 in the annual taxes. Business 72 2 Environment
IN FORCE
1. Peru – China Free Trade Agreement (FTA) 2. Peru – United States Trade Promotion Act
In economic terms, China has been the fastest Peru had access to certain unilateral growing economy worldwide over the past two preferential customs duties with the United decades (around 10% per year of sustained States starting in 1991, granted by the growth). The entry into force of this Agreement U.S. Congress to Andean Countries through in March 2010 has opened up a market of 1.399 the Andean Trade Preference Act (ATPA), billion inhabitants, of which 350 million are which remained in force until 2001. These consumers with high purchasing power. preferential duties were renewed in 2002 with the enactment of the Andean Trade Promotion Exports 2019 totaled USD13.5 billion, with China and Drug Eradication Act (ATPDEA) under being our main trading partner. Peru's principal which they remained in force until 2010. exports to China are copper, fishmeal, and iron ore, lead and zinc. Among the main Peruvian In 2004, Peru initiated negotiations for a Free products benefitting from the trade agreement Trade Agreement (FTA) with the United States, are giant squid, cuttlefish and squid, fresh and in 2009 the Peru – United States Free Trade grapes, avocado, mango, barley, paprika, tara Act entered into force. Just two years after powder, and fine wool yarn, etc. In exchange, entering into force, 418 new products were China ships machinery, mobile telephones, exported, of which 96% were non-traditional laptops, and high technology products to Peru. products, most notably in the areas of Metal- Mechanical (32%), Chemicals (20%), and The FTA establishes clear rules of the game, Textiles (11%). within a transparent and predictable framework through which it will not only contribute to The main products exported to the United increasing bilateral trade, but also boost Chinese States are minerals, metals, textiles, fish investment in Peru, principally in the industries products, crude oil, coffee, cocoa, handcrafts, of mining, agriculture, electricity, wind power, oil paprika, artichokes, grapes, mangoes, and gas, and fisheries. tangerines and asparagus. In 2019, exports reached USD5.7 billion, of which gold, asparagus, fresh grapes, and avocado were the Ernst & Young and the Ministry of Foreign most notable. Affairs (MRE) prepared the Chinese version of this Peru's Business and Investment Guide 2019/2020. It can be downloaded for free at here. Business 73 2 Environment
3. Peru – European Union (EU) Trade Agreement
The Trade Agreement with the European by Peruvian businesspeople in Europe. Under Union (EU) is part of a business strategy to this agreement, Peruvian citizens can enter the expand and develop the export supply of following 30 countries without a short-term visa: Peru. It became effective on March 2013. The Germany, Austria, Belgium, Denmark, Slovakia, European Union constitutes a market of great Slovenia, Spain, Estonia, Finland, France, opportunities with over 515 million inhabitants Sweden, Czech Republic, Hungary, Italy, Latvia, and per capita income levels, which are among Lithuania, Luxemburg, Malta, The Netherlands, the highest in the world. Poland, Portugal, Greece, Iceland, Liechtenstein, Norway, Switzerland, Bulgaria, Croatia, Cyprus, The European Union is one of the main and Romania. This decision came about as a destinations for Peruvian exports, with a result of increased economic relations with the share of 13% of the total exports in 2019. European Union, a decline in irregular migration Furthermore, this Region registered a direct flows, and the opportunities offered by the foreign investment in Peru with a share of 35% economic growth registered in Peru. of the capital stock from Spain and the United Kingdom. 4. Peru – Japan Economic Partnership Agreement
With the entry into force of the Peru – European The Economic Partnership Agreement between Union (EU) FTA, custom duties were removed Peru and Japan was entered into on May 31, in 99.3% of Peru's exports, benefiting 95% of 2011. As from its entry into force in March custom duty lines for agricultural products, 2012, Peruvian products such as coffee, such as asparagus, avocados, coffee, fruits of asparagus, sacha inchi, giant squid, fish oil, the genus capsicum (for example, paprika and copper, lead, zinc, purple corn, giant corn from chili peppers), artichokes, among others. Cusco, swordfish, among others, may enter the Japanese market with preferential access. The execution of the agreement between the Republic of Peru and the European Union on In 2019, Japan was the sixth largest destination visa exemptions for short-term stays, signed on for Peruvian exports, accounting for USD1.974 March 14, 2016 in the city of Brussels, in the billion, consisting mainly of minerals and Kingdom of Belgium, was a major achievement agricultural products. that will facilitate business investment contacts Business 74 2 Environment
5. Peru - South Korea Free Trade Agreement (FTA) 6. Peru - Singapore Free Trade Agreement (FTA) and the Peru – Thailand Protocol to Accelerate The Free Trade Agreement (FTA) between the Liberalization of the Trade of Goods and Peru and South Korea was signed on March Facilitation of Commerce 21, 2011, in Seoul, Korea, and it became effective on August 1, 2011. With this trade In the context of the policy of rapprochement agreement, Peru gains access to a market of with the Asian market, Peru executed in Lima the 50.4 million inhabitants, with a GDP per capita Peru - Singapore Free Trade Agreement (FTA) of USD37,940. For Peruvian exports, this on May 29, 2008. Unlike Thailand and most represents a significant number of potential Asian countries, which import mainly minerals consumers and a major opportunity for Peru's from Peru, Singapore is a very important non- export supply. traditional Peruvian exports destination. The main products exported to Singapore, which are Peruvian non-traditional exports reap the most already benefiting from this Agreement, which benefit from this Agreement, since, according entered into force on August 1, 2009, are cocoa, to the Peruvian Ministry of Foreign Trade and grapes, t-shirts, shirts, asparagus, shellfish, and Tourism (MINCETUR), the Korean market has a other marine products. Singapore is one of the preference for high quality fresh products, such main ports of entry into East Asia; thus, the as agricultural and fisheries products from Peru. Agreement will enable Peruvian products to be admitted under better conditions throughout South Korea was the fourth largest destination the Region, boost greater investments, and for Peruvian exports during 2019, with a consolidate the Peruvian strategy of becoming total of USD2.266 billion. Fisheries and the center of Asian operations in South America. agricultural products were the most benefited by this trade agreement. In the case of Thailand, the Protocol to Accelerate the Liberalization of the Trade of Goods and Facilitation of Commerce was signed in the city of Busan, South Korea, on November 19, 2005, and entered into force on December 31, 2011. The main products exported to Thailand include zinc and copper ore; fishmeal, fish powder, and fish pellets; cuttlefish; and fresh grapes. The tariff liberalization agreed to with Thailand encompasses approximately 75% of both countries' tariff subheadings. The subheadings corresponding to Basket A were immediately liberalized; while those corresponding to Basket B were scheduled for liberalization five years after the entry into force of the Protocol. Business 75 2 Environment
7. Peru – MERCOSUR Economic Complementation 8. Peru - Mexico Trade Integration Agreement Agreement (ACE) The Trade Integration Agreement was entered Economic Complementation Agreement 58 into by and between Peru and Mexico on April (ACE 58) was signed between Peru and the 6, 2011, and became effective on February MERCOSUR countries (Argentina, Brazil, 1, 2012. This Agreement opened up a 122.3 Paraguay and Uruguay) on November 30, million people market, allowing our exports 2005 and became effective on January preferential access to over 12,000 products, 2006. Subsequently, in 2006 the Protocol for such as canned fish, cookies, paprika, timber, Venezuela's Accession to the MERCOSUR was shrimp, and other products. On the other hand, signed, and there has been a trade agreement the importation from Mexico of consumer goods with this country since 2012. and household appliances and technological products will allow Peruvian consumers access The purpose of this Agreement was to establish to a wider variety and quality of products, a legal framework for integration, to facilitate at lower prices. Additionally, rules are being business trade between member countries, consolidated to promote the already strong through the elimination of tariff and non-tariff Mexican investment existing in Peru, as well as measures affecting trade in goods and services. the Peruvian investments in said country.
Therefore, since January 1, 2012, products 9. Andean Community of Nations (CAN) exported to Argentina and Brazil enter these countries with a rate of 0% in customs duties. Peru, together with other South American countries (Bolivia, Colombia and Ecuador) is a The main products exported to MERCOSUR are member of the Andean Community of Nations minerals and copper products, zinc ores, silver, (CAN) since 1997. Within this framework, olives, varnishes, calcium phosphates, cotton there are agreements related to lower customs shirts, tara and dyes. The Peru - MERCOSUR duties for goods, sub-regional liberalization trade reached USD1.635 billion in 2019, which of service markets, community regulations accounts for 4% of the Peruvian trade. regarding intellectual property, land, air and water transport, telecommunications, etc. An important part of Peruvian trade regulations is governed by the commitments made under this forum. However, in its policy of trade liberalization with other countries and blocs, Peru deepened the liberalization of trade and the opening of its market to much higher levels, and with commitments that are broader in scope than those arising from the CAN. Business 76 2 Environment
10. Peru - Canada Free Trade Agreement (FTA) 12. Asia Pacific Economic Cooperation (APEC) Forum The Free Trade Agreement between Peru and Canada was signed in Lima on May 29, 2008 Asia Pacific Economic Cooperation (APEC) is and entered into full force and effect on August an informal consultation forum to promote 1, 2009. This agreement is a major commercial economic cooperation, economic growth, and treaty that incorporates chapters on the the expansion of trade among its members. National Treatment and Access to Markets, the Unlike the World Trade Organization (WTO) Facilitation of Trade, Investment, Trans Border and other multilateral forums, APEC does not Trading of Services, Telecommunications, comprise a trade treaty or agreement involving Financial Services, Competition Policies, binding obligations. On the contrary, it is Public Contracting, E-Commerce, Labor and based on non-binding individual action plans Environmental issues, among others. It must be on trade and investment liberalization and noted that the main products exported to Canada facilitation; a collective action plan to closely are gold, silver, copper, lead, fish oil, fishmeal, coordinate the adoption of modern and efficient handcrafts, and textiles. processes aimed at simplifying requirements and procedures for the various productive 11. Peru - Chile Free Trade Agreement (FTA) transactions; and the economic and technical cooperation among its members. Peru is active This Agreement is effective as from March 1, in the work of this forum, and it participates 2009. It extends the Economic Complementation in the definition of the lines of action and its Agreement (ACE No. 38) signed by Peru and organization. As it was in 2008, in 2016 Peru Chile in 1998, together with its annexes, was once again the host of the APEC forum, the protocols, and other regulatory tools. ministerial meetings, and the summit of leaders of the 21 economies making up the forum. In 2016, there was a total exemption in the trading of goods between the two countries. APEC countries account for approximately 60% Bilateral commercial exchange has increased of the global Gross Domestic Product (GDP), USD2.641 billion in 2019. 50% of world trade, and around 50% of the world population. Business 77 2 Environment
13. World Trade Organization (WTO) The four member countries of the Pacific Alliance have agreed to the elimination of visas The WTO is the world's largest forum on between them. Under this commitment, Mexico's the administration of the multilateral legal Department of Foreign Affairs (SRE) announced framework that regulates world trade and certain - on November 9, 2012 - the abolition of other aspects, such as intellectual property, visas for Peruvian citizens. Furthermore, the investment measures, or the environment in Integrated Latin American Stock Market known those areas related to trade. It is also a dispute as MILA is currently in operation. This initiative resolution mechanism for differences on aims at achieving the stock market integration trade policies, as well as the most important of Colombia, Peru, Chile and Mexico, which negotiation forum in matters of world trade. It is were formally incorporated in June 2014. In made up of 160 members (as at August 2020). addition, in February of 2014, Chile, Colombia, Peru has been a member of the WTO since its Mexico, and Peru signed an agreement that creation in 1995, and all commercial agreements immediately liberalized 92% of trade from the reached at the WTO have been ratified by and payment of custom duty tariffs and a uniform incorporated into its domestic law. customs system has been established, which entered into force on May 1, 2016. Finally, the 14. Pacific Alliance standardization of the technical and health provisions, as well as the elimination of health The Pacific Alliance is a trade bloc consisting of barriers on exports shall be carried out after the four Latin American countries: Chile, Colombia, entry into effect of the Agreement. Mexico, and Peru. This proposal was unveiled in Peru, on April 28, 2011, through the The Pacific Alliance has 59 Observer Members, Declaration of Lima. The aim of this partnership and the Associated State figure was created is to encourage regional integration and further in order to negotiate trade agreements with growth, development, and competitiveness countries interested in having a more profound of its member countries' economies, and relationship with the Pacific Alliance. to progressively move closer to the goal of achieving the free movement of goods, services, Ernst & Young (EY) and the Ministry of Foreign capital, and people. Among these agreements Affairs (MTR) prepared the Pacific Alliance to form part of the Pacific Alliance, an essential Business and Investment Guide 2018-2019. It requirement set forth is that all new members can be downloaded for free at here. of the alliance must have in place the rule of law, democracy, and constitutional order in the country.
For further information on the Latin American The countries members of the Pacific Alliance Integrated Market (MILA) please visit here. represent 36% of Latin America's Gross Domestic Product (GDP) and 2.7% of the global GDP. Together, they would be the eighth largest economy in the world. Trade represents 41% of Latin America and the Caribbean. Additionally, by 2018, they were able to obtain 38% of the Direct Foreign Investment (DFI) in Latin America. Business 78 2 Environment
15. Comprehensive and Progressive Agreement It should be noted that the potential market for Trans-Pacific Partnership (CPTPP) for fruits and vegetables, Andean grains, fishery products, and cotton and alpaca textile On March 8, 2018, the ministers of foreign products is valued at over USD2.5 billion. In this trade of 12 countries from the Asia-Pacific sense, growth opportunities for non-traditional region signed the text of the Comprehensive exports will also increase within the CPTPP and Progressive Agreement for Trans-Pacific bloc. Furthermore, the CPTPP will contribute Partnership (CPTPP). to convert Peru into a hub, attracting South American investment to export with preferences In addition to Peru, the CPTPP was signed to the other countries of the CPTPP, and by Australia, Brunei Darussalam, Canada, investment from the Asia-Pacific to export to Chile, Japan, Malaysia, Mexico, New Zealand, the rest of South America through the trade Singapore, and Vietnam. Together, these agreements that Peru has signed with the countries constitute a market of 500 million countries of the region. people with a GDP of USD10.200 billion, accounting for over 13% of the global economy, 16. Peru-Australia Free Trade Agreement and an average GDP per capita of approximately USD28,000. The Peru-Australia Free Trade Agreement was signed on February 12, 2018, and entered The Agreement has entered the stage of internal into force on February 11, 2020. The FTA with improvement which, in many cases, implies Australia is one of the most ambitious bilateral prior approval of the respective Parliaments trade agreements that Peru has entered into of each country that has signed it. Among with any of its trading partners, containing the items included in the Agreement, there commitments regarding tariffs, health measures, are issues related to regional integration, technical barriers to trade, customs matters, regulatory coherence, economic development, trade in services, investments, movement of access of SMEs to the markets, competitiveness individuals, e-commerce, and more. It is also and transparency, as well as commitments to the first bilateral trade agreement in which Peru liberalize the trade of goods and services of the has included a chapter on Small and Medium- latest generation of Free Trade Agreements. Sized Enterprises (SMEs), Development; and Facilitation of Business, in an effort to promote Peru has become one of the three nations in the use of benefits derived from the FTA. Thus, Latin America to be part of the largest free trade the broad scope of the FTA with Australia seeks zone in the world, which includes countries to contribute to the country's economic growth on three continents (the Americas, Asia, and development. and Oceania). It is the area with the greatest economic projection in the immediate future, due This agreement will allow 96% of all Peruvian to the growth of its middle class. For Peru, the exports to Australia to enter the country without CPTPP represents a major commercial platform paying tariffs as soon as the FTA enters into to diversify the destinations of its exports in ten force. Special note should be made of products countries, improving the conditions of the free with great potential as exports that will enter trade agreements currently in force with some tariff-free, such as avocados, blueberries, of them. The CPTPP will also allow Peru to enter mandarin oranges, frozen shrimp and prawns, five new markets (Australia, Brunei Darussalam, cuttlefish, and preparations used for animal Malaysia, New Zealand, and Vietnam) under a feed, cotton polo shirts and t-shirts, dress single homogeneous set of rules. shirts, chemical inputs, construction equipment, Business 79 2 Environment
iron and steel manufacture, zinc manufacture, to strengthen openness and trade preferences and others. Additionally, the agreement for Peru in a market that concentrates one establishes a framework intended to guarantee sixth (1/6th) of the world's population. In an the transparency and efficiency of health and initial MINCETUR study, 61 Peruvian products phytosanitary procedures, thus facilitating trade have been identified (52 belonging to the Non- in agricultural products. traditional Sector) in which Peru has significant comparative advantages and where India would Likewise, the trade agreement seeks to eliminate have a relatively high purchasing power. or reduce any existing barriers to trade in services. In particular, it benefits all internet- In addition, Peru is evaluating the possibility and cloud-based services and guarantees that of proposing a feasibility study to enter into a software, applications, games for cell phones and trade agreement with the Russian Federation, tablets, and digital products in general can all be which would open up, for Peru, a market in an sold without restrictions. economy that represents 23% of world's exports and 1.8% of the world's imports. In this regard, 17. Peru's Upcoming Trade Agreements MINCETUR has determined that custom duty tariff liberalization between the two countries As part of efforts deployed to expand and could generate an increase in bilateral exports strengthen the market for Peruvian products of 36% for Peru, emphasizing, for the Peruvian worldwide, Peru and Turkey begun negotiations side, the ability to export fresh grapes, colorants, for a Free Trade Agreement (FTA) between tangerines, capsicum, zinc oxide, fresh mangoes, the two countries on January 20, 2014. An and other products. important fact is that it has been decided for the negotiations to include liberalization of trade On October 2, 2012, Peru also signed in services, which is something that Turkey had a Framework Agreement for Economic, never negotiated in earlier agreements from the Commercial, Technical and Investment start. The products enjoying a greater interest Cooperation with Member States of the Gulf on the part of Turkey include mining, fisheries, Cooperation Council, made up of Saudi Arabia, livestock, leather, and fur. Bahrain, Kuwait, Qatar, Oman, and the United Arab Emirates. The Agreement is the first one Central America and the Caribbean are other signed with a South American country. regions where a significant business and investment potential for Peruvian companies has The possibility to continue negotiating trade been identified. Likewise, negotiations have been agreements with Israel, South Africa or Morocco initiated with El Salvador, which are expected to is not ruled out. be concluded in a short period.
Peru is also taking the initiative to promote the start of trade negotiations with India. One of the interests in future negotiations with India is Business 80 2 Environment
PERU'S ENTRY TO THE SCHENGEN AREA
Since March 2016, Peruvians no longer require a Thanks to the progressive reduction of the barriers Schengen visa, thanks to notable improvements to enter the Schengen area, Peru will have the in the economic, social, and political spheres, capacity to consolidate trade and investment setting the stage for the elimination of alternatives with 30 European countries. restrictions and leading to a more profound integration between Peru and its European trading partners. Peruvian may now travel to the For further information on Peruvian trade agreements, visit here. 26 countries of the European Union, as well as Iceland, Liechtenstein, Norway, and Switzerland, without a visa for a period of up to 90 days out of every 180-day period for purposes of tourism.
This situation is the result of a process whereby Peru has worked, through its foreign policy, to achieve a greater integration within the international community, using instruments such as trade agreements and cooperation agreements, both bilateral and multilateral. Similarly, the progress made by the country in terms of security, irregular immigration and human rights, as well as the economic benefits for the European bloc of having Peru as one of its principal economic partners due to the current conditions of its economic growth, have been crucial for this development.
With regard to the integration between the European continent and Peru, it must be noted that this approach has been operated at three levels: an initial macro level based on the cooperation and integration actions taken between the EU and the Community of American and Caribbean States (CELAC) an intermediate level within the context of the agreement between the EU and the Andean Community of Nations (CAN), and a third level that includes the bilateral relations between Peru and Europe. Business 81 2 Environment
Peru aspires to become a member country of At present, the OECD is comprised by 37 countries: the Organization for Economic Co-operation and Germany, Australia, Austria, Belgium, Canada, Development (OECD). To date, it has made great Chile, Colombia, South Korea, Denmark, Spain, strides towards the achievement of this goal, United States, Slovenia, Estonia, Finland, France, PERU AND THE since the incorporation of Peru in July 2008 as Greece, Hungary, Ireland, Iceland, Israel, Italy, ORGANIZATION5 a signatory of the Declaration on International Japan, Latvia, Lithuania, Luxembourg, Mexico, Investment and Multinational Enterprises of the Norway, New Zealand, Netherlands, Poland, FOR ECONOMIC OECD. As a member, Peru, through ProInversión Portugal, United Kingdom, Czech Republic, CO-OPERATION implemented the National Contact Point in Slovakia, Sweden, Switzerland and Turkey. AND order to diffuse the directives of the OECD for multinational enterprises, taking part in activities In view of Peru's great potential for economic DEVELOPMENT and meeting of the OECD Investment Committee. consolidation, in December of 2014, Peru signed (OECD) Its participation in the OECD Competence the “Country Program” agreement, aimed at Committee and its entry to the Development working on strengthening the five required axes Center in 2014 must also be mentioned. that would pave the way to form part of the OECD towards 2021: The purpose of the OECD is to analyze, share and disseminate better practices of public policies 1. Identification of barriers to national growth among its more than 200 committees and work and development groups, located in countries that represent 70% 2. Public governance and improvement of of the global economy. Similarly, the countries of institutional issues the OECD and a growing number of emerging and 3. Anti-corruption and transparency of the State developing economies, share and discuss their governance experiences to improve the services 4. Improvements in human capital and productivity provided to their citizens. 5. Progress made in environmental matters
Peru has resorted to the experience, practices, and legal instruments of the OECD to support its reform program. For example, in 2018, Peru took a significant leap in fighting corruption and fostering transparency and the exchange of information by completing the necessary steps to become a Party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (Anti-Bribery Convention) and the Multilateral Convention on Mutual Administrative Assistance in Tax Matters. Business 82 2 Environment
Peru also passed 29 legislative orders (decretos legislativos) that implement the recommendations of the OECD and other political regulations in areas such as the environment, waste management, transparency, the exchange of information on tax matters, regulatory policy, cross-border bribery, integrity, and rural and urban development.
PILLARS OF COMPETITIVENESS PERU - OCDE 2019
Macroeconomic stability 100
80
60 Innovation Infrastructure capacity 40
20
0 Peru OCDE
Adoption of Human capital information technology
Institutionality
Source: Multiannual Macroeconomic Framework 2021-2024, Ministry of Economy and Finance (MEF) SECTOR ANALYSIS 3 Sector 84 3 Analysis
The Mining Sector has been and is of great As of october 2020, mining exports reached importance to the Peruvian economy. The country's USD19.82 billion. mining tradition has been around since pre-Inca times, ranking to this day as one of the main While the metallic mining GDP is expected to fall by MINING activities related to the development of Peru. 14.1% in 2020, a rapid recovery is also forecast for 1 Thus, over the years, mining has contributed 2021, with a growth of 14.4%. approximately one half of the country's revenues, as a result of its exports.
PRODUCTION OF FINE CONTENT MINERALS (THOUSANDS)
Ore 2012 2013 2014 2015 2016 2017 2018 2019 2020* Copper 1,299 1,376 1,378 1,701 2,354 2,446 2,437 2,455 1,927 (TMF) Gold 161,545 151,486 140,097 146,823 153,005 151,104 140,210 128,413 78,714 (gr. Fina) Zinc 1,281 1,351 1,319 1,422 1,337 1,473 1,474 1,404 1,178 (TMF) Silver 3,481 3,674 3,768 4,102 4,375 4,304 4,160 3,860 2,673 (Kg. Fina) Lead 249 266 278 316 314 307 289 308 217 (TMF) Iron 6,685 6,687 7,193 7,321 7,663 8,806 9,533 10,120 7,914 (TMF) Tin 26 24 23 20 19 18 18 19 18 (TMF) Molybdenum 17 18 18 20 26 28 28 30 29 (TMF)
*As of November 2020 Source: Ministry of Energy and Mines (MINEM)
PERU'S RANKING IN WORLD METALS Peru is one of the countries with the greatest PRODUCTION – 2020 variety of minerals in the world. It currently has some of the world's largest precious metal and Ore World Latin America base metal mines. Many of the most important Silver 2 2 mining companies around the world have Tin 4 1 operations in the country. Zinc 2 1 Copper 2 2 Mercury 4 2 Molybdenum 4 2 Lead 3 1 Gold 8 1 Selenium 10 1 Cadmium 9 2
Source: Mineral Commodity Summaries 2020 Sector 85 3 Analysis
EVOLUTION OF METALLIC MINING PRODUCTION (PERCENTAGE VARIATION)
21.2 20 15.7 15 14.4
10
4.3 4.5 5 2.5
0 -0.8 -2.1 -2.1 -2.2 -1.7 -5 -2.7
-10 -14.1 -15 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* 2021*
*December 2020 Inflation Report Source: Central Reserve Bank of Peru (BCRP)
EVOLUTION OF MINING SECTOR INDICATORS (IN USD MILLIONS)
35,000 29,814 29,039 28,437 30,000 28,018 27,145 25,000 22,155 23,675 22,670 20,135 18,672 20,000 16,629 15,000 15,691 14,483 14,824 14,966 13,351 10,000 12,412 12,074 12,300 12,676 11,606 11,776 5,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Mining Exports Metallic Mining GDP
Source: National Institute of Statistics and Information (INEI) / National Superintendency of Customs and Tax Administration (SUNAT)
NON-METALLIC MINING PRODUCTION
January - November Metal (Tons) 2019 2020 Var. % Limestone / Dolomite 13,622,450 16,380,010 20.2% Phosphates 10,207,684 7,807,738 -23.5% Concrete 5,805,331 3,018,342 -48.0% Salt 1,141,914 988,960 -13.4% Stone (construction) 1,532,338 987,283 -35.6% Pozzolana 1,216,296 823,428 -32.3% Sand (coarse / fine) 1,806,461 776,842 -57.0% Calcite 1,865,511 730,292 -60.9% Seashell 1,447,056 649,590 -55.1%
Source: Ministry of Energy and Mines (MINEM) Sector 86 3 Analysis
This is how Peru finds itself among the six countries The mining industry is one of the main sources of with the highest mineral wealth in the world. tax revenue in Peru. Furthermore, the Mining Sector In 2020, Peru maintained its position as the is important for its contribution to job creation. second largest producer of silver, copper, and zinc As of November of 2020, 199,137 people worked worldwide. It was also the third world producer of directly in mining activities, and several million lead and fourth world producer of molybdenum and people in indirect activities. tin; and the world's eighth largest producer of gold.
DIRECT EMPLOYMENT AS OF NOVEMBER 2020
250,000 208,566 210,199 199,137 197,453 189,556 200,000 178,533 172,652 154,171 160,802 150,000
130,537 128,930 100,000
50,000
January February March April May June July August September October November
Source: Ministry of Energy and Mines (MINEM)
Although Peru has large deposits of various Peru has many regions engaged in mining, a mineral resources, it is estimated that only a small wide variety of world-class mineral deposits, percentage of Peru's mineral reserves are being and a very dynamic mining community. It also exploited, since 14.2% of the territory is subject to boasts of an excellent geographical location in the mining concessions and only 1.3% of the territory center of South America, with easy access to the is developed for formal mining exploration and Asian and North American markets. Even within exploitation. According to recent statistics, Peruvian Latin America, Peru enjoys one of the largest production ranges are minimal considering the potentials for mining exploration and production. country's mineral potential. However, using modern Moreover, its clear and simple mining laws, and techniques and equipment, it is developing the excellent geological potential, have contributed commercial potential of various minerals from to Peru attracting one of the largest projects for regions previously considered inaccessible. mineral exploration and development in the world. Therefore, it is believed that Peru has the ability to double or triple production, especially in the area of basic metals. Sector 87 3 Analysis
The following table shows a list of estimated Currently, there is a growing number of exploration reserves of major minerals in the country. projects in Peru, which come mainly from junior Canadian companies. However, medium and large METAL RESERVES 2020 (IN MILLIONS) companies in the United States, Australia, China, and Brazil are also becoming important investors Metals Unit of Measurement: Tons in exploration. Although there is a great variety in Copper 87,000 the scale of exploration programs of large, medium and junior companies, it is believed that most large Gold 2,100 and medium sized companies are concentrating Zinc 19,000 on advanced projects that will lead to production; Silver 120,000 or in some cases, that will make them more Molybdenum 2,900,000 attractive for acquisition, while the emphasis of Tin 110,000 junior companies remains at the early exploration stage. Simultaneously, total expenditure on mineral Source: US Geology Survey exploration has increased in recent years with some fluctuations, since producers see it as a more MINING RIGHTS 2019 economical and less risky means to replace and add mineral reserves. Today, the level and the success Description Quantity Area (ha) % Peru of exploration have a direct influence on the future Titled Mining competitiveness of mineral production in Peru. 32,350 13,107,000 10.20% Rights Mining Rights Currently 11,871 5104000 3.97% Being Processed Total 44,221 18,211,000 14.17%
Source: Geological, Mining, and Metallurgic Institute (INGEMMET) Sector 88 3 Analysis
Mine construction project portfolio is shown herein below:
PORTFOLIO OF MINING PROJECTS
According to the Ministry of Energy and Mines and table show the 46 portfolio projects, which (MINEM), investment in mining during 2020-2022 comprise those that involve the construction of new is estimated to be equivalent to USD56.16 billion. mines (greenfield), the extension or restructuring of 67.7% will be invested in copper projects and the existing ones (grownfield) as well as those involving majority of the remaining percentage shall be the reuse of tailings (greenfield). used in gold and iron projects. The following graph
48% 30% 7% 15%
Pre-feasibility Feasibility Detailed Engineering Construction USD26.85 billion USD16.59 billion USD4.22 billion USD8.50 billion
• Antilla • Expansion Bayóvar • Expansion Shouxin • Expansion Santa María • Ayawilca • Expansion Pachapaqui • Corani • Expansion Toromocho • AZOD • Cañariaco (Norte) • Tía María • Ariana (Accha and Yanque) • Chalcobamba Fase I • Yanacocha Sulfuros • Mina Justa • Cañón Florida • Conga • Quellaveco • Cotabambas • Fosfatos Pacífico • Don Javier • Magistral • El Galeno • Ollachea • Fosfatos Mantaro • Optimization • Haquira Inmaculada • Hierro Apurímac • Pampa de Pongo • Hilarión • Pampacancha • Integración • Copper plant Coroccohuayco Río Seco • La Granja • Quechua • Los Calatos • Río Blanco • Los Chancas • San Gabriel • Macusani • San Luis • Michiquillay • Zafranal • Pukaqaqa • Shalipayco • Trapiche
Projects are shown in random positions. Estimated portfolio as of November 2020 Source: Ministry of Energy and Mines (MINEM) Sector 89 3 Analysis
Out of the 46 projects, five are currently in the construction phase, which amount to an aggregate investment sum of USD8.50 billion. Likewise, four projects are in the detailed engineering stage with an investment of USD4.22 billion; 17 projects are in the feasibility stage with an investment of USD16.59 billion; and the remaining projects are in the pre-feasibility phase with an investment of USD26.85 billion.
Construction Investment Project Operator Region Main Ore Current Stage Start Date (USD million) Mina Justa Marcobre S.A.C. Ica Copper Construction 1,600 Under Expansion Toromocho Minera Chinalco Perú S.A. Junín Copper Construction 1,355 Construction Quellaveco Anglo American Quellaveco S.A. Moquegua Copper Construction 5,300 Expansion Santa María Compañía Minera Poderosa S.A. La Libertad Gold Construction 121 2021 Expansion Shouxin Minera Shouxin S.A. Ica Iron Detailed ingineering 140 2021 Corani Bear Creek Mining S.A.C. Puno Silver Detailed ingineering 579 2021 Yanacocha Sulfuros Minera Yanacocha S.R.L. Cajamarca Gold Detailed ingineering 2,100 2021 Optimization Inmaculada Compañía Minera Ares S.A.C. Ayacucho Gold Feasibility 136 2021 Chalcobamba Fase I Minera Las Bambas S.A.C. Apurímac Copper Feasibility 130 2021 Pampacancha Hudbay Peru S.A.C. Cusco Copper Feasibility 70 Compañía de Minas Buenaventura 2021 San Gabriel Moquegua Gold Feasibility 422 S.A.A. Procesadora Industrial Río Seco 2022 Copper plant Río Seco Lima Copper Feasibility 350 S.A. 2022 Magistral Nexa Resources Perú S.A.A. Áncash Copper Feasibility 490 2023 Zafranal Compañía Minera Zafranal S.A.C. Arequipa Copper Feasibility 1,263 Southern Perú Copper Corporation, 2024 Los Chancas Apurímac Copper Pre-Feasibility 2,600 Suc. del Perú 2024 Trapiche El Molle Verde S.A.C. Apurímac Copper Pre-Feasibility 973 Southern Perú Copper Corporation, 2025 Michiquillay Cajamarca Copper Pre-Feasibility 2,500 Sucursal del Perú Ariana Ariana Operaciones Mineras S.A.C. Junín Copper Construction 125 Pampa de Pongo Jinzhao Mining Perú S.A. Arequipa Iron Feasibility 2,200 Southern Perú Copper Corporation, Tía María Arequipa Copper Detailed ingineering 1,400 Sucursal del Perú Expansion Bayóvar Compañía Minera Miski Mayo S.R.L. Piura Phosphate Feasibility 300 Expansion Pachapaqui ICM Pachapaqui S.A.C. Áncash Zinc Feasibility 117 To be Cañariaco (Norte) Cañariaco Copper Perú S.A. Lambayeque Copper Feasibility 1,437 defined Conga Minera Yanacocha S.R.L. Cajamarca Gold Feasibility 4,800 Fosfatos Pacífico Fosfatos del Pacífico S.A. Piura Phosphate Feasibility 830 Ollachea Minera Kuri Kullu S.A. Puno Gold Feasibility 165 Quechua Compañía Minera Quechua S.A. Cusco Copper Feasibility 1,290 Río Blanco Rio Blanco Copper S.A. Piura Copper Feasibility 2,500 San Luis Reliant Ventures S.A.C. Áncash Silver Feasibility 90 Sector 90 3 Analysis
Construction Investment Project Operator Region Main Ore Current Stage Start Date (USD million) Integración Coroccohuayco Compañía Minera Antapaccay S.A. Cusco Copper Pre-Feasibility 590 Antilla Panoro Apurímac S.A. Apurímac Copper Pre-Feasibility 250 Ayawilca Tinka Resources S.A.C. Pasco Zinc Pre-Feasibility 262 AZOD (Accha and Yanque) Exploraciones Collasuyo S.A.C. Cusco Zinc Pre-Feasibility 346 Cañón Florida Nexa Resources Perú S.A.A. Amazonas Zinc Feasibility 214 Cotabambas Panoro Apurímac S.A. Apurímac Copper Pre-Feasibility 1,530 Don Javier Junefield Group S.A. Arequipa Copper Pre-Feasibility 600 El Galeno Lumina Copper S.A.C. Cajamarca Copper Pre-Feasibility 3,500 Fosfatos Mantaro Mantaro Perú S.A.C. Junín Phosphate Pre-Feasibility 850 To be defined Haquira Minera Antares Perú S.A.C. Apurímac Copper Pre-Feasibility 1,860 Hierro Apurímac Apurímac Ferrum S.A. Apurímac Iron Pre-Feasibility 2,900 Hilarión Nexa Resources Perú S.A.A. Áncash Zinc Pre-Feasibility 585 Rio Tinto Minera Perú Limitada La Granja Cajamarca Copper Pre-Feasibility 5,000 S.A.C. Los Calatos Minera Hampton Perú S.A.C. Moquegua Copper Pre-Feasibility 655 Uranium/ Macusani Macusani Yellowcake S.A.C. Puno Pre-Feasibility 887 Lithium Pukaqaqa Nexa Resources Perú S.A.A. Huancavelica Copper Pre-Feasibility 655 Shalipayco Nexa Resources Perú S.A.A. Junín Zinc Pre-Feasibility 91 Total (46 projects) 56,158
Estimated portfolio as of November 2020 Source: Ministry of Energy and Mines (MINEM)
BEGINNING OF CONSTRUCTION OF MINE CONSTRUCTION PROJECTS
2021 2022 2023 2024 2025
USD3.577 billion USD840 million USD1.263 billion USD3.573 billion USD2.500 billion
• Expansion Shouxin • Magistral • Zafranal • Los Chancas • Michiquillay • Chalcobamba Fase I • Copper plant • Trapiche • Corani Río Seco • Opt. Inmaculada • Pampacancha • San Gabriel • Yanacocha Sulfuros
Estimated portfolio as of November 2020 Source: Ministry of Energy and Mines (MINEM) Sector 91 3 Analysis
CONSTRUCTION OF PROJECTS ACCORDING TO TYPE OF PROJECT
46 Projects 36 Projects 10 Projects USD56.158 GREENFIELD billion BROWNFIELD 91% USD51.100 9% USD5.058 billion billion
NEW PROJECTS EXPANSION PROJECTS
• Antilla • Mina Justa • Expansion Bayóvar • Ariana • Ollachea • Expansion Pachapaqui • Ayawilca • Pampa de Pongo • Expansion Santa María • AZOD • Copper plant Río Seco • Expansion Shouxin (Accha and Yanque) • Pukaqaqa • Expansion Toromocho • Cañariaco (Norte) • Quechua • Cañón Florida • Quellaveco REPLACEMENT PROJECTS • Conga • Río Blanco • Chalcobamba Fase I • Corani • San Gabriel • Integración Coroccohuayco • Cotabambas • San Luis • Opt. Inmaculada • Don Javier • Shalipayco • Pampacancha • El Galeno • Tía María • Yanacocha Sulfuros • Fosfatos Mantaro • Trapiche • Fosfatos Pacífico • Zafranal • Haquira • Hierro Apurímac • Hilarión • La Granja • Los Calatos • Los Chancas • Macusani • Magistral • Michiquillay
Estimated portfolio as of November 2020 Source: Ministry of Energy and Mines (MINEM) Sector 92 3 Analysis
CONSTRUCTION OF PROJECTS ACCORDING TO TYPE OF MINE
28 12 3 1
Open Pit Underground Open Pit and To be defined USD47.493 billion USD2.982 billion Underground USD887 million USD4.306 billion
• Expansion Bayóvar • Expansion Pachapaqui • AZOD • Macusani • Expansion Toromocho • Expansion Santa María (Accha and Yanque) • Antilla • Ariana • Haquira • Cañariaco (Norte) • Ayawilca • Yanacocha Sulfuros • Chalcobamba Fase I • Cañón Florida • Conga • Hilarión • Corani • Los Calatos • Cotabambas • Ollachea • Don Javier • Opt. Inmaculada • El Galeno • San Gabriel • Fosfatos Mantaro • San Luis • Fosfatos Pacífico • Shalipayco • Hierro Apurímac • Integración Coroccohuayco • Expansion Bayóvar • Expansion Toromocho • Antilla • Cañariaco (Norte) • Chalcobamba Fase I • Conga • Corani • Cotabambas • Don Javier TAILINGS REUSE • El Galeno • Fosfatos Mantaro Expansion Shouxin USD140 million • Fosfatos Pacífico • Hierro Apurímac REFINERY • Integración Coroccohuayco Copper plant Río Seco USD350 million
Estimated portfolio as of November 2020 Source: Ministry of Energy and Mines (MINEM) Sector 93 3 Analysis
ORIGIN OF ESTIMATED MINING PROJECTS PORTFOLIO, BY COUNTRY (IN USD MILLIONS)
No. of In USD Country % Projects Millions United 6 12,066 21.5% Kingdom China 7 10,425 18.6% Canada 11 8,573 15.3% United States 3 7,200 12.8% Mexico 3 6,500 11.6% Peru 6 4,297 7.7% Australia 2 3,065 5.5% Brazil 5 2,035 3.6% Japan 1 1,290 2.3% Switzerland 1 590 1.1% South Korea 1 117 0.2% Total 46 56,158 100.0%
Estimated portfolio as of November 2020 Source: Ministry of Energy and Mines (MINEM)
ESTIMATED PORTFOLIO OF MINING PROJECTS - PARTICIPATION BY PREDOMINANT MINERAL
No. of In USD Metal % Projects Millions Copper 25 38,023 67.7% Gold 6 7,744 13.8% Iron 3 5,240 9.3% Phosphate 3 1,980 3.5% Zinc 6 1,615 2.9% Uranium/ 1 887 1.6% Lithium Silver 2 669 1.2% Total 46 56,158 100.0%
Estimated portfolio as of November 2020 Source: Ministry of Energy and Mines (MINEM) Sector 94 3 Analysis
GEOGRAPHICAL LOCATION OF THE MINE CONSTRUCTION PROJECTS
1 31.9% 9 0.4% Cajamarca Amazonas USD17.90 billion USD214 millon 5 projects 1 project
2 6.5% 10 0.6%
2 9 Piura Lima USD3.63 billion USD350 millon 3 1 3 projects 1 project
4 3 2.6% 11 0.5% Lambayeque Pasco 5 USD1.44 billion USD262 millon 11 1 project 1 project
12 10 4 0.2% 12 4.2%
8 14 La Libertad Junín USD121 millon USD2.42 billion 13 6 15 2 projects 4 projects
7 5 2.3% 13 18.2%
16 Áncash Apurímac USD1.28 billion USD10.24 billion 4 projects 7 projects
6 3.1% 14 4.1% Ica Cusco USD1,74 billion USD2.29 billion 2 projects 4 projects
7 9.7% 15 2.9% Arequipa Puno USD5.46 billion USD1.63 billion 4 projects 3 projects
8 1.2% 16 11.4% Huancavelica Moquegua USD655 millones USD6.38 billion 2 projects 3 projects
Estimated portfolio of projects as of November 2020 Source: Ministry of Energy and Mines (MINEM) Sector 95 3 Analysis
MINING EXPLORATION PROJECT PORTFOLIO In addition, Peru has a portfolio of 64 mining exploration projects, the total investment of which amounts to USD498.6 million. The following investments correspond to new projects that will be developed in the course of 2020-2021.
Main Investment (in N° Project Operator Region Product USD Millions) Projects with Environmental Management Instruments (EMI) under evaluation 1 Acata Compañía Minera Ares. S.A.C. Arequipa Ag 5.3 2 Hilarión Nexa Resources Peru S.A.A. Áncash Pb 9.4 3 Huiñac Punta Condor Exploration Peru S.A.C. Huánuco Cu 2.0 4 Santander Trevali Peru S.A.C. Lima Zn 2.0 5 Sombrero Sombrero Minerales S.A.C. Ayacucho Cu 2.4 6 Yanacochita II Compañía Minera Ares. S.A.C. Ayacucho Au 2.8 7 Yumpag Compañía de Minas Buenaventura S.A.A. Pasco Ag 20.0 Exploration authorization projects under evaluation 8 Alta Victoria Minera Cappex S.A.C. Junín Ag 3.5 9 Anamaray Compañía de Minas Buenaventura S.A.A. Lima Au 1.5 10 Apacheta Vale Exploration Peru S.A.C. Huancavelica Cu 4.4 11 Ayawilca Tinka Resources S.A.C. Pasco Sn 18.0 12 Bongará Minera Forrester S.A.C. Amazonas Zn 3.1 13 Cerro Negro Minera Yanacocha S.R.L. Cajamarca Au 5.0 14 Chapitos Camino Resources S.A.C. Arequipa Cu 83.4 15 Coasa Palamina S.A.C. Puno Au 3.8 16 El Galeno Lumina Copper S.A.C. Cajamarca Cu 15.0 17 El Porvenir Nexa Resources El Porvenir S.A.C. Pasco Zn 2.2 18 Elisa Sur BHP Billiton World Exploration Inc. Sucursal del Peru Moquegua Cu 1.1 19 Huacullo Compañía Minera Ares. S.A.C. Apurímac Au 1.5 20 Iluminadora Newmont Peru S.R.L. Arequipa Au 3.8 21 La Quinua Minera Yanacocha S.R.L. Cajamarca Au 1.0 22 Lourdes Pucara Resources S.A.C. Ayacucho Au 2.0 23 Mina Marta Compañía Minera Barbastro S.A.C. Huancavelica Ag 2.5 24 Pampa Negra Minera Pampa de Copper S.A.C. Moquegua Cu 45.5 25 Pucajirca Minera Peñoles de Peru S.A. Áncash Cu 2.0 26 Quehuincha Hudbay Peru S.A.C. Cusco Cu 3.0 27 San Antonio Sumitomo Metal Mining Peru S.A. Apurímac Cu 8.0 28 San José Minera Yanacocha S.R.L. Cajamarca Au 1.8 29 Santo Domingo Fresnillo Peru S.A.C. Apurímac Au 1.3 30 Scorpius Alpha Mining S.A.C. Ayacucho Au 1.8 31 Shalipayco Compañía Minera Shalipayco S.A.C. Junín Zn 2.0 32 Suyawi Rio Tinto Mining Exploration S.A.C. Tacna Cu 15.0 Sector 96 3 Analysis
Main Investment (in N° Project Operator Region Product USD Millions) Exploration authorization projects under evaluation 33 Trapiche El Molle Verde S.A.C. Apurímac Cu 9.0 34 Tumipampa Sur Compañía Tumipampa S.A.C. Apurímac Cu 2.0 35 Yumpag (fase 2) Compañía de Minas Buenaventura S.A.A. Pasco Ag 3.0 36 Zafranal Compañía Minera Zafranal S.A.C. Arequipa Cu 47.0 37 Zoraida II Volcan Compañía Minera S.A.A. Junín Ag 1.7 Exploration projects underway or to be executed 38 Amauta Compañía Minera Mohicano S.A.C. Arequipa Cu 10.0 39 Arcata Compañía Minera Ares. S.A.C. Arequipa Ag 6.0 40 Ayawilca Tinka Resources S.A.C. Pasco Ag 1.0 41 Azulmina Nexa Resources Peru S.A.A. Áncash Zn 6.9 42 Berenguela Sociedad Minera Berenguela S.A. Puno Ag 10.8 43 Caylloma Minera Bateas S.A.C. Arequipa Ag 14.3 44 Cochaloma Compañía Minera Ares. S.A.C. Ayacucho Au 2.3 45 Colquipucro Tinka Resources S.A.C. Pasco Zn 2.5 46 Eposuyay (fase I) Vale Exploration Peru S.A.C. La Libertad Cu 4.6 47 Illari Newmont Peru S.R.L. Lima Au 7.3 48 Inmaculada Compañía Minera Ares. S.A.C. Ayacucho Ag 6.0 49 La Zanja Minera La Zanja S.R.L. Cajamarca Au 1.6 50 Loma Linda Consorcio Mining Sunec S.A.C. Pasco Au 3.8 51 Malpaso II Pan American Silver Huaron S.A. Huánuco Ag 3.2 52 Mayra Compañía de Minas Buenaventura S.A.A. Arequipa Au 1.0 53 Pablo Sur Compañía Minera Ares. S.A.C. Ayacucho Au 2.8 54 Palca Compañía Minera Ares. S.A.C. Ayacucho Au 2.8 55 Palma Compañía Minera Chungar S.A.C. Lima Zn 6.1 56 Quenamari Minsur S.A. Puno Sn 6.0 57 Romina 2 Compañía Minera Chungar S.A.C. Lima Zn 2.5 58 San Pedro Pan American Silver Huaron S.A. Pasco Pb 4.0 59 Shahuindo Shahuindo S.A.C. Cajamarca Au 13.2 60 Sierra Nevada y Manuelita Compañía Minera Argentum S.A. Junín Cu 4.1 61 Soledad (fase I) Chakana Resources S.A.C. Áncash Ag 4.3 62 Tambomayo (fase II) Compañía de Minas Buenaventura S.A.A. Arequipa Au 1.5 63 Tantahuatay 4 Compañía Minera Coimolache S.A. Cajamarca Au 28.0 64 Yauricocha Sociedad Minera Corona S.A. Lima Cu 3.6 Total (64 projects) 498.6
Estimated portfolio as of February 2020 Source: Ministry of Energy and Mines (MINEM) Sector 97 3 Analysis
MINE EXPLORATION PROJECTS ACCORDING TO PROGRESS STAGE
9% 59% 32%
Evaluation of Evaluation of Exploration Evironmental Exploration Running or Impact Authorization to Run Assesment USD295 million USD160 million USD44 million
• Arcata • Alta Victoria • Mina Marta • Amauta • Palca • Hilarión • Anamaray • Pampa Negra • Arcata • Palma • Huiñac Punta • Apacheta • Pucajirca • Ayawilca (1ra • Quenamari • Santander • Ayawilca • Quehuincha MEIAsd) • Romina 2 • Sombrero (2da MEIAsd) • San Antonio • Azulmina • San Pedro • Yanacochita II • Bongará • San José 1 • Berenguela • Shahuindo • Yumpag • Cerro Negro • Santo Domingo • Caylloma • Sierra Nevada y • Chapitos • Scorplus • Cochaloma Manuelita • Coasa • Shalipayco • Colquipucro • Soledad (fase 1) • El Galeno • Suyawi • Eposuyay (fase I) • Tambomayo • El Porvenir • Trapiche • Illari (fase 2) • Elisa Sur • Tumipampa Sur • Inmaculada • Tantahuatay 4 • Huacullo • Yumpag (fase 2) • La Zanja • Yauricocha • Iluminadora • Zafranal • Loma Linda • La Quinua • Zoraida II • Malpaso II • Lourdes • Mayra • Pablo Sur
Estimated portfolio as of February 2020 Source: Ministry of Energy and Mines (MINEM)
MINE EXPLORATION PROJECTS ACCORDING TO MINERAL TO EXTRACT
Mineral N° Projects USD Million % Copper 18 262 53% Gold 21 90 18% Silver 13 82 16% Zinc 8 27 5% Tin 2 24 5% Lead 2 13 3% Total 64 498 100%
Estimated portfolio as of February 2020 Source: Ministry of Energy and Mines (MINEM) Sector 98 3 Analysis
MINING EXPORTS BY COUNTRY OF MINING EXPORTS BY MINING PRODUCT TYPE DESTINATION AS OF OCTOBER 2020 (%) AS OF SEPTEMBER 2020 (%)
China Germany Copper Lead 62% 4% 49% 6% Japan Bulgaria Gold Iron 10% 2% 32% 3% South Other Zinc Others Korea 13% 6% 4% 9%
Source: Ministry of Energy and Mines (MINEM) Source: Ministry of Energy and Mines (MINEM)
The role of government with respect to mining advantages to the mining investors and abundant is that of a regulator, promoter, and observer. freedom to import the machinery and equipment Currently, government has privatized much of its needed to carry out their activities at a lower cost property and assets in the Mining Sector; thus, and with less bureaucratic requirements. large mining operations are in the hands of private domestic and foreign mining companies. Mining The measures introduced by Peru regarding the companies are not obliged to satisfy the domestic development of the Mining Sector are yielding market before exporting their products, and they favorable results. The major international mining are not conditioned to sell on official terms or companies perceive the country as an attractive prices. In addition, Peru offers significant business area for investment.
MAIN DESTINATIONS FOR MINING INVESTMENTS IN THE WORLD (2019)
Russia 4%
Canada 16% Europe 2% United States FSU 10% 2% China 4% Rest of Latin Western Mexico America Africa 5% 3% 4% Central Africa Peru Brazil 2% 6% 3% Australia Chile Southern Africa 14% 7% Argentina 1% 3%
Source: Ministry of Energy and Mines (MINEM) Sector 99 3 Analysis
MINING SECTOR INVESTMENT (IN USD BILLIONS)
10 9 8.9 8.0 8 7.5 6.8 7 6.4 6.1 6 4.9 5 3.9 3.7 4 3.3 3.3 3 2.3 2 1.3 1 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*
*As of November 2020 Source: Ministry of Energy and Mines (MINEM)
Investment in mining activities reached a figure MINING INVESTMENTS ACCORDING TO TYPE OF of USD6.1 billion in 2019. In addition, mining INVESTMENT - 2020* investment in Peru registered a significant rise over (PERCENTAGE OF PARTICIPATION) the past few years, the investment in 2019 being four times the investment achieved in 2008, with Benefit Development a significant growth in the areas of beneficiation plant and preparation plant equipment, mining equipment, exploration, 33% 9% exploitation, infrastructure and operations Mining Exploration expansion preparation. The growth of exports and equipment 5% 19% global positioning are explained by a larger volume Infrastructure Other of production of the principal minerals. 18.% 16%
*As of November 2020 Source: Ministry of Energy and Mines (MINEM)
MINING SECTOR INVESTMENT BY TYPE OF PRODUCTION (IN USD MILLIONS)
Type 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* Benefit plant 1,125 1,140 1,414 890 446 238 287 1,412 1,513 1,215 Mining equipment 776 525 789 558 654 387 491 657 1,035 663 Exploration 869 905 776 625 527 377 484 413 357 194 Infrastructure 1,407 1,797 1,808 1,464 1,228 1,079 1,557 1,084 1,316 686 Development and 788 639 405 420 375 350 388 761 1,152 331 preparation Other 1,412 2,492 3,671 4,123 3,594 902 721 621 784 577 Total 6,378 7,498 8,864 8,079 6,825 3,334 3,928 4,947 6,157 3,667
As of November 2020 Source: Ministry of Energy and Mines (MINEM) Sector 100 3 Analysis
AVERAGE PRICE OF MAIN METALS
Percentage variation versus Metal Dec. 2020 Nov. 20 Jul. 20 Jan. 20 Copper (cUSD/lb) 352.54 9.9% 22.0% 28.8% Gold (USD/ozt) 1,859.65 -0.2% 0.9% 19.3% Zinc (cUSD/lb) 126.24 4.2% 27.8% 18.4% Silver (USD/ozt) 25.04 4.1% 21.9% 39.3% Lead (cUSD/lb) 91.36 5.1% 10.8% 4.7% Tin (cUSD/lb) 897.57 6.8% 13.3% 16.2%
Source: Central Reserve Bank of Peru (BCRP)
WORLD'S MAIN COPPER PRODUCERS (IN THOUSANDS OF TONS)
5,830 Chile 5,600 2,440 Peru 2,400 1,590 China 1,600 1,220 United States 1,300 1,230 Congo 1,300 920 Australia 960 854 Zambia 790 751 Mexico 770 751 Russia 750 603 Kazakhstan 700 651 Indonesia 340
1,000 2,000 3,000 4,000 5,000 6,000 7,000
2018 2019
Source: US Geolocial Survey
COPPER PRODUCTION (IN MILLIONS OF TONS)
2.5 2.4 2.4 2.1 2.2 2.0 1.9 1.5 1.5 1.2 1.2 1.0 1.1 1.0 0.5 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*
*As of November 2020 Source: US Geological Survey Sector 101 3 Analysis
INTERNATIONAL DAILY COPPER PRICE (cUSD/lb)
380,000 362.99
340,000 cUSD/lb
300,000
260,000
220,000
180,000
01/01/2020 04/07/2018 07/11/2019 10/09/2020 01/14/2021
Source: Central Reserve Bank of Peru (BCRP)
MONTHLY GOLD PRODUCTION (TMF)
12 11.2 11.2 11.0 10.8 10.9 10.9 10.4 10.3 10.7 10.6 10.4 10 10.3 9.3 8 8.2 7.9 7.6 7.0 7.2 6 6.0 6.1 5.1 4 4.1
2
January February March April May June July August September October November
2019 2020
Source: Ministry of Energy and Mines (MINEM)
INTERNATIONAL DAILY GOLD PRICE (USD/ozt)
2,100
2,000 USD/ozt 1,841.75 1,900 1,800
1,700
1,600
1,500
1,400
01/01/2020 04/7/2018 07/11/2019 10/09/2020 01/14/2021
Source: Central Reserve Bank of Peru (BCRP) Sector 102 3 Analysis
PERU: COUNTRY FOR EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE (EITI)
The Extractive Industries Transparency Initiative (EITI) is a recognized alliance comprising government agencies, extractive companies, international organizations and civil society sectors to promote the use of standards of transparency in payments performed by the mining, oil, and gas companies to each state, and how they channel such income to guarantee the sustainable development of their people
Peru was the first country in the Americas to join this initiative, due to the great importance and impact of extractive industries on their national income. In February 2012, Peru received the rank of being a country in compliance with the EITI initiative, after satisfying the corresponding audit.
For further information, please visit here.
EY and the Ministry of Foreign Affairs (MRE) prepared a specialized Investment Guide to Mining. It can be downloaded for free at here. Sector 103 3 Analysis
1. Financial System STRUCTURE OF THE PERUVIAN FINANCIAL SYSTEM (NOVEMBER 2020) As of November 30, 2020, the Peruvian Financial System consisted of a total of 56 Banking Institutions 16 FINANCIAL companies, divided into six groups: Banking Financial Institutions 10 2 Institutions (16), Financial Institutions (10), Non- Non-Banking Micro-Finance Institutions 28 SYSTEM, Banking Micro-Finance Institutions (28), Banco • Municipal Thrifts (CM) 12 SECURITIES de la Nación (1) and Banco Agropecuario (1). In • Rural Savings and Loans Institutions 7 MARKET, AND this structure, Banks had the highest share in terms of assets, with 84.1% of the total, followed (CRAC) PENSION by Non-Banking Micro-Finance Institutions, with • Development Institution for Small and 9 SYSTEM 6.6%, and Financial Institutions, with 2.6%. Microenterprises (EDPYME) Banco de la Nación 1 It is worth pointing out that the default rate of Banco Agropecuario 1 the Peruvian Financial Sector has remained at a Total 56 rate of 3.7% as of november 2021. Furthermore, the Level of Access to Banking Services Source: Superintendency of Banking, Insurance, and Private (Bancarization) (measured as gross loans on Pension Fund Management Companies (SBS) Gross Domestic Product - GDP) increased from 22% in 2007 to 61% in December 2019. This is largely explained by the greater number of branches across the country, which has tripled in the last five years. However, the level of banking penetration is still below the average for the Region, representing an opportunity at the local level, especially in the Retail Sector as consumer, micro and small enterprises loans.
There is a Deposit Insurance Fund (FSD) that aims to protect depositors in the case that a financial institution member of FSD, where they keep deposits, should become bankrupt. As of 2019, deposits insured by the FSD totaled PEN106.405 billion, increasing by 8.2% over 2018. It covers all registered and insured deposits that depositors hold in the same financial entity for up to PEN101,522 (approximately USD28,200) for the period of December 2020 - February 2021. Sector 104 3 Analysis
EVOLUTION OF THE FINANCIAL SYSTEM (IN PEN THOUSANDS)
1,200,000 80
66 609,226 70 1,000,000 62 62 61 61 499,160 59 60 59 60 57 60 55 55 56 56 800,000 N° de entidades 392,667 413,090 392,667 50 392,239 356,105 600,000 40 395,568 284,785 323,666 253,654 298,678 30 400,000 217,520 256,302 280,784 201,164 225,745 221,866 160,161 160,444 183,406 20 157,760 119,109 140,085 200,000 128,563 335,584 377,813 104,815 109,948 271,672 286,795 315,888 79,960 226,268 258,888 10 126,144 148,483 167,221 188,548 75,895 102,504 105,784 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2007 2008 2020* Loans Deposits Assets No. of entities
*As of November 2020 Source: Superintendency of Banking, Insurance, and Private Pension Fund Management Companies (SBS)
Evolution of Total Loans Portfolio in USD Millions Level of Access to Banking Services 2020* 104,948 2019 61.3% 2019 101,385 2018 59.0% 2018 93,735 2017 55.7% 2017 88,490 2016 35.7% 2016 80,951 2015 36.8% 2015 75,920 2014 32.0% 2014 75,776 2013 28.6% *As of November 2020 Source: Superintendency of Banking, Insurance, and Private Source: Superintendency of Banking, Insurance, and Private Pension Fund Management Companies (SBS) / Peruvian Banking Pension Fund Management Companies (SBS) / Peruvian Banking Association (ASBANC) Association (ASBANC)
Level of Default Evolution of Deposits in USD Millions 2020* 3.7% 2020* 109,880 2019 3.0% 2019 97,784 2018 2.9% 2018 88,628 2017 3.0% 2017 86,395 2016 2.8% 2016 77,667 2015 2.5% 2015 74,998 2014 2.5% 2014 74,451 *As of November 2020 *As of November 2020 Source: Superintendency of Banking, Insurance, and Private Source: Superintendency of Banking, Insurance, and Private Pension Fund Management Companies (SBS) / Peruvian Banking Pension Fund Management Companies (SBS) / Peruvian Banking Association (ASBANC) Association (ASBANC) Sector 105 3 Analysis
CREDITS IN THE FINANCIAL SYSTEM AS OF NOVEMBER 2020 (IN USD MILLIONS)
Large Medium Small Structure Corporate Microenterprises Consumer Mortgage Total Business Business Business Banking Institutions 19,564 16,300 18,075 6,613 1,537 14,581 14,202 90,873 Financial Institutions 4 5 60 1,024 763 1,834 48 3,737 Municipal Thrifts (CM) 32 18 602 3,284 1,495 1,406 399 7,237 Rural Savings and Loan Banks (CRAC) 0 6 45 181 151 269 6 659 Small and Medium-Sized Enterprise - 1 85 132 45 416 49 728 Development Entities Banco de la Nación - - - - - 1,404 90 1,494 Banco Agropecuario 0 0 152 42 28 - - 222 Total 19,601 16,330 19,020 11,275 4,019 19,910 14,794 104,948
Source: Superintendency of Banking, Insurance, and Private Pension Fund Management Companies (SBS)
AVERAGE TIME ESTIMATED FOR THE INCORPORATION OF A FINANCIAL INSTITUTIONS
Incorporation Authorization to Incorporate (Approximately 7.25 months) Business License (Approximately 5.75 months) Type and Minimum Capital Requirement • The SBS • The BCRP • Request for • Listing in evaluates evaluates the SBS to the Stock • Financial • Filing with application to • The BCRP the • The conduct a • The SBS issues Exchange of • Deadline institution the SBS an incorporate evaluates application institution verification the required the shares of for start of application application to the financial application to to is registered visit authorization Stock operations requirements incorporate institution incorporate incorporate with the resolution a financial the financial the financial SUNARP and grants institution institution institution the business license • The SBS • The SBS will • The SBS will advise advise the verfies the • Period BCRP of the • The BCRP BCRP on the request for filing application issues application objections opinion and relating to forwards to the financial SBS institution's application 0 to 0 to 0 to 0 to 0 to 0 to 0 to 0 to 0 to 15 days 60 days 30 days 90 days 21 days 60 days 30 days 60 days 21 days
Total Estimated Time: 13 Months
Sources: Central Reserve Bank of Peru (BCRP), Superintendency of Banking, Insurance, and Private Pension Fund Management Companies (SBS), Superintendency of Public Records Offices (SUNARP), Lima Stock Exchange (BVL), Peruvian Securities and Exchange Superintendency (SMV), EY Sector 106 3 Analysis
Microfinance Sector
The Global Microscope is a global microfinance These five domains are assessed using study that assesses the environment for financial eleven indicators: inclusion across five categories and 55 countries. 1. Government collection of sex-disaggregated In the 2020 edition, the Economist Intelligence financial inclusion data Unit (EIU) examines how countries are promoting financial inclusion for both women and men. 2. Inclusion of a gender approach in national financial inclusion strategies The Microscope was originally developed for 3. Inclusion of a gender approach in financial countries in the Latin America and Caribbean literacy strategies and programs regions in 2007 and was expanded into a global 4. Inclusion of a gender approach in digital study in 2009. literacy strategies and programs 5. Women's participation in decision-making at The five domains evaluated are as follows: financial regulators • Government and policy support 6. Non-discrimination in account opening • Stability and integrity 7. Diversity programs for non-banking or • Products and outlets correspondent agents • Consumer protection 8. Gender gap in access to national • Infrastructure identification (ID) 9. Non-discrimination in access to national ID 10. Gender gap in internet access 11. Gender gap in access to a mobile telephone
Peru ranked second overall in the Global Microscope 2020. Compared to its scores in the previous edition of the Microscope, Peru showed the greatest improvement in the domain of Products and points of sale, specifically, for facilitating the use of financial inclusion services like basic accounts and electronic money. The Ministry of Development and Social Inclusion (MDS) has implemented a transfer program of emergency funds called Bono Familiar Universal. Payment can be made by direct deposit to a bank or mobile account at the Banco de la Nación, or in cash at a designated agent. Sector 107 3 Analysis
FAVORABLE ENVIRONMENT FOR FINANCIAL During 2020 to December 31, the average daily INCLUSION - GLOBAL MICROSCOPE 2020 trading volume reached USD24.24 million; additionally, the market capitalization for the Rank Country Points out of 100 same period reached USD165.540 billion. 1 Colombia 82 The Lima Stock Exchange (BVL) is a member 1 Peru 82 of the Latin American Integrated Market 3 Uruguay 78 (MILA) an entity responsible for integrating 4 Argentina 74 the multi-national stock exchange through the 4 Mexico 74 use of technological tools and standardization 6 India 73 of regulations on the capital market trading. Regarding authorized stock market brokers, 6 Tanzania 73 there are 21 brokerage firms (SAB) in the 8 Brazil 71 country, responsible for marketing, custody, 8 Philippines 71 management, and advice with respect to 10 Indonesia 68 securities trading. 10 Rwanda 68 AVERAGE DAILY TRADING VOLUME IN 12 Chile 66 THE BVL (IN USD MILLIONS) 13 China 64 13 South Africa 64 Year Volume 15 Thailand 63 2020 24.24 16 Costa Rica 62 2019 24.73 17 El Salvador 61 2018 24.73 18 Paraguay 60 2017 35.63 18 Russia 60 2016 18.26 20 Ghana 59 2015 14.18 2014 22.97 Source: The Economist Intelligence Unit 2013 23.82 2. Securities Market 2012 30.34 2011 31.02 The Peruvian Securities Market consists of the 2010 26.89 primary market, in which public and private 2009 22.93 institutions issue fixed-income and equity instruments, and the secondary market, where 2008 31.81 financial intermediaries place such instruments 2007 49.61 in the securities market through trading Source: Lima Stock Exchange (BVL) mechanisms and platforms, such as the Lima Stock Exchange (BVL). The Lima Stock Exchange General Index (S&P / BVL Peru General) consists of the 30 most traded stocks in the market. Sector 108 3 Analysis
MAIN STOCK INDEXES (IN USD MILLIONS)
10,000 8,944 9,000 8,000 7,000 6,208 5,779 6,000 5,473 4,566 5,000 4,000 3,000 2,000 1,000 2016 2017 2018 2019 2020
Equity Instruments Debt Instruments Initial Public Offering Lending and Repo Operations Total Amount Negotiated
Source: Lima Stock Exchange (BVL)
The Exchange Traded Fund (ETF) is an iShares stock that measures the stock exchange performance of a set of underlying securities of this investment fund. The ETF that measures the performance of securities of the economic performance of Peru (known as EPU) has shown the following evolution since January 2017:
ETF - EPU (USD)
50,000 USD 40,000 34.86 30,000
20,000
10,000
01/18/2017 01/18/2018 01/18/2019 01/18/2020 12/31/2020
Source: Bloomberg Sector 109 3 Analysis
3. Private Pension System
The Private Pension System consists of four PENSION SYSTEM STATISTICS financial institutions responsible for the AS OF NOVEMBER 2020 management of pension funds in the form of Individual Capitalization Accounts (CIC). The No. of Active AFP Affiliates 7,749,298 role of the Private Pension Fund Management Portfolio administrated by the USD44.871 Companies (AFPs) is to receive input from their Private Pension Fund billion affiliates, investing in a manner permitted by Source: Superintendency of Banking, Insurance, and Private law, to provide benefits relating to retirement, Pension Fund Management Companies (SBS) disability, survivorship, and funeral expenses. Peru has four types of funds to invest in: Fund In mid-2012, the Superintendency of 0 invests in instruments with very low volatility Banking, Insurance, and Private Pension Fund in order to protect the accumulated capital, and Management Companies (SBS) passed Law was launched in April 2016. Fund 1 represents 29903 - Reform of the Private Pension System investments of low volatility and thereby lower (SPP) whereby it seeks to increase the coverage risk, basically fixed income investment. Fund of pension security, encourage competition 2 consists of investments of average volatility between Private Pension Fund Management with a moderate risk, a mix between fixed and Companies (AFPs) and increase net returns variable income. Fund 3 consists of highly volatile of pension funds commissions to improve investments that imply greater risks. contributors' pensions.
ANNUAL NOMINAL PROFITABILITY AS OF NOVEMBER 2020
12% 11.6%
10%
7.8% 8% 7.5% 6.8% 6.8% 6.3% 6.4% 6% 5.8% 5.7% 5.2%
4% 3.2% 2.9% 2% 1.6% 1.3% 0.0% 0.0%
1 year 3 years 5 years 10 years
Fund 0* Fund 1 Fund 2 Fund 3
*Fund 0 only shows 2-and-3 year profitability since it was launched in 2016. Source: Superintendency of Banking, Insurance, and Private Pension Fund Management Companies (SBS) Sector 110 3 Analysis
Energy demand is one of the main indicators of CAPACITY FOR POWER GENERATION WITH a growing economy. The benefits of investing in RENEWABLE ENERGY TO BE EXPLOITED the energy sector increase growth potential and the population's wellbeing. Peru has projects As shown below, Peru is one of the countries ENERGY involving a diverse range of energy sources, such in Latin America with one of the highest ratios 3 as hydroelectric and thermal power plants, as of energy reserves measured as total power/ well as a project for the mass use of natural gas capacity. This ensures relatively cheaper costs of for central and southern Peru, representing a power generation and sustainable reserves within capital expenditure of approximately USD200 the region. million, with an influence in the zones of Ucayali, Junín, Huancavelica, Ayacucho, Apurímac, Country's Total Power Cusco, and Puno. Energy Total Power Installed / Capacity Type (MW) Capacity (Times) (MW) GENERATION DISPATCH Hydraulic 69,000 5,163 13 Wind 22,000 375 58 The table below shows the estimated annual generation dispatch which plans to cover the system Solar Indefinite 285 - demand, separating the power station generation Source: Ministry of Energy and Mines (MINEM), Economic by source: hydraulic, natural gas, wind energy, solar, Operation Committee for the National Interconnected System biomass, coal, residual, and diesel. (COES SINAC)
2017 2018 2019 2020* Source Type GWh % GWh % GWh % GWh % Hydraulic 31,783 54.5% 32,819 56.5% 30,168 57.0% 26,570 59.6% Natural Gas 23,674 40.6% 23,379 40.2% 19,951 37.7% 15,340 34.4% Coal 1,084 1.9% 144 0.2% 36 0.1% 13 0.0% Biomass 143 0.2% 143 0.2% 252 0.5% 271 0.6% Wind 987 1.7% 987 1.6% 1,646 3.1% 1,656 3.7% Solar - - - - 762 1.4% 704 1.6% Residual 427 0.7% 12 0.0% 47 0.1% 7 0.0% Diesel 184 0.3% 0 0.0% 27 0.1% 42 0.1% Total 58,282 100% 63,508 100% 52,889 100% 44,603 100%
*As of November 2020 Source: Economic Operation Committee for the National Interconnected System (COES SINAC) Sector 111 3 Analysis
ENERGY PRODUCTION BY GENERATION WORKS PROGRAM GENERATION TYPE 2019 The 2019-2022 Generation Works Program is Hydroelectric shown below. It consists of the generation projects 57.0% most likely to begin operating: Thermal Power 38.4% Date Project Type MW Wind 3.1% 2019 CB Callao Biomass 2.4 CH Centauro - Solar 2019 Hydroelectric 12.5 1.5% Etapa I 2019 CH Karpa Hydroelectric - RER 20.0 2019 CH La Virgen Hydroelectric 84.0 2019 CH Manta Hydroelectric - RER 17.8 Diesel 2019 CH Zaña 1 Hydroelectric - RER 13.2 0.1% CH 8 de Residual 2020 Hydroelectric - RER 19.8 0.1% Agosto Biomasa 2020 CH El Carmen Hydroelectric - RER 8.6 0.5% 2020 CE Huambos Wind 18.4 Coal 2020 CE Duna Wind 18.4 0.1% CH Santa Natural Gas 2020 Hydroelectric - RER 18.7 37.7% Lorenza I CH Laguna 2020 Hydroelectric - RER 20.0 Source: Economic Operation Committee for the National Azul Interconnected System (COES SINAC 2020 CH Hydrika 6 Hydroelectric - RER 8.9 2020 CH Ayanunga Hydroelectric - RER 20.0 CT Refinería 2020 Thermal 100.0 Talara 2020 CH Shima Hydroelectric - RER 9.0 CH Centauro - 2021 Hydroelectric 12.5 Etapa II 2021 CH Colca Hydroelectric - RER 12.1 2021 CH Kusa Hydroelectric - RER 15.6 2021 CH Alli Hydroelectric - RER 14.5 2021 CH Hydrika 2 Hydroelectric - RER 4.0 2021 CH Hydrika 4 Hydroelectric - RER 8.0 2021 CH Hydrika 1 Hydroelectric - RER 6.6 2021 CH Huatziroki I Hydroelectric - RER 11.1 2021 CH Hydrika 5 Hydroelectric - RER 10.0 2022 CH Hydrika 3 Hydroelectric - RER 10.0
Source: Economic Operation Committee for the National Interconnected System (COES SINAC). Final Proposal for the Updating of the 2019-2022 Transmission Plan Sector 112 3 Analysis
The electricity and water sectors grew by 3.9% in with a 7.9% growth driven by electricity and water 2019. Despite the 6.1% drop estimated for 2020, investment projects, as well as the reactivation of the sector is expected to quickly recover in 2021, the other sectors of the economy. ELECTRICITY4 MAXIMUM DOMESTIC ELECTRICITY DEMAND (IN MWh) AND WATER 7,125 7,116 7,070 7,100 7,017 6,949 6,917 6,876 6,917 6,836 6,840 6,828 6,960 6,900 6,990 6,793 6,739 6,728 6,710 6,672 6,836 6,884 6,700 6,576 6,639 6,573 6,529 6,616 6,785 6,542 6,550 6,607 6,449 6,462 6,657 6,500 6,595 6,400 6,519 6,554 6,489 6,383 6,341 6,341 6,427 6,303 6,425 6,462 6,300 6,312 6,100 6,101 5,900 5,682 5,700
5,500
5,300 5,173
5,100 May July April June March August October January February December November September 2017 2018 2019 2020
Source: Economic Operation Committee for the National Interconnected System (COES SINAC)
ANNUAL GROWTH OF ELECTRICITY CONSUMPTION (PERCENTAGE CHANGE)
12% 10.8% 10% 9.0% 9.2% 9.4% 10.1% 8.3% 8.6% 8% 8.1% 6.7% 5.4% 6% 4.6% 5.9% 5.9% 5.7% 4.4% 4.1% 5.4% 6.6% 4% 2.9% 1.8% 3.5% 2% 2.9% 3.4% 1.9% 1.6% 0% 1.0%
-2%
-4% -4.7%
-6%
-8% -6.9% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Electricity Consumption (GW/h) Maximum Demand (MW)
Source: Economic Operation Committee for the National Interconnected System (COES SINAC) Sector 113 3 Analysis
ESTIMATED COST OF ELECTRICITY BY 2020 (IN USD CENTS/KWH)
Canada 5.3
Mongolia 6.1
Peru 6.6
United States 7.5
Argentina 7.8
Australia 8.8
Mexico 9.0
Chile 12.1
2 4 6 8 10 12 14
Source: Ministry of Economy and Finance (MEF)
ELECTRICITY AND WATER SECTOR INDICATORS
Item 2015 2016 2017 2018 2019 2020* GVA Electricity and Water • Constant (in PEN Millions) 8,666 9,332 9,432 9,860 10,248 8,736 Annual Variation % 6.6 7.7 1.1 4.5 3.9 - Electric Power Generation (GWh) • Hydraulic 22,456.2 23,009.6 27,741.4 29,357.9 30,168.4 29,895 • Thermal 21,262.1 24,020.8 19,898.4 19,220.0 20,312.8 18,144 • Wind Power 230.9 241.8 1,065.2 1,493.6 1,646.2 1,804 • Solar Power 590.7 1,054.1 288.1 745.2 761.7 778 Total 44,539.9 48,326.3 48,993.1 50,816.7 52,889.1 50,622 National Electrification 93.0 95.0 96.0 97.0 - - Ratio (%) No. of Power Supply 6,738 6,993 7,167 7,376 7,614 - Customers (Thousands) Production of Drinking Water (Thousands of m3) • National Level 1,421,219 1,408,361 1,233,554 1,285,162 1,310,990 1,382,201 • Metropolitan Lima 713,459 714,745 699,009 729,326 748,492 693,104
*As of November 2020 GVA: Gross Value Added Sources: National Institute of Statistics and Information (INEI), Economic Operation Committee for the National Interconnected System (COES SINAC)V.A.B.: Valor agregado bruto Sources: Instituto Nacional de Estadística e Informática (INEI), Comité de Operación Económica del Sistema Interconectado Nacional (COES SINAC) Sector 114 3 Analysis
DRINKING WATER AND SEWER SYSTEM COVERAGE
Service coverage consists of the percentage of the In the case of drinking water, the average coverage population with access to drinking water or sewer nationwide went from 87.43% in 2014 to 89.87% system services. With the support of providers, in 2018, while sewer system services went from sanitation service has experienced sustained growth 81.44% to 83.82% during the same period. in recent years.
92% 98.87% 89.55% 90% 88.62% 87.74% 88% 87.43%
86% 83.73% 83.82% 84% 81.69% 82.28% 81.44% 82% 2014 2015 2016 2017 2018
Drinking Water Coverage Sewer System Coverage
Source: National Superintendency of Sanitation Services (SUNASS)
INVESTMENT MEANS AND RETURN ALTERNATIVES IN THE ELECTRICITY MARKET
Electrical Companies Generation Transmission Distribution
Description Renewable projects energy Non-renewable projects energy for Projects the secured transmission system for Projects additional the transmission system Non-rural electrification projects Rural electrification projects Investment Means • Own Initiative √ √ √ √ √ • International Public Bidding According to Plan* √ √ √ • Direct Subsidy Approved by Government √ Alternatives for the Sale of Electricity • Spot Market √ √ √ √ • Free Market √ √ √ √ • Regulated Market √ √ √ √ • Auction Market √ √ √ √ Other Alternatives for Return on Investment • Regulated Road Tolls √ √ • Premiums and Benefits of Subsidies √ √ √
*Estimate Source: Ministry of Energy and Mines (MINEM) Sector 115 3 Analysis
NATIONAL PLAN FOR RURAL ELECTRIFICATION 2016 - 2025
Total Investment Beneficiary Year in USD Population 2016 345,593,645 1,008,648 2017 229,791,934 606,945 2018 136,416,160 351,026 2019 173,427,475 537,532 2020 94,432,573 225,992 2021 41,394,764 159,880 2022 59,761,747 230,396 2023 23,749,912 86,772 2024 23,749,912 86,772 2025 23,820,528 87,030 Total 2016-2025 1,152,138,650 3,380,993
Source: Ministry of Energy and Mines (MINEM)
ELECTRICITY AND WATER MATURE SECTOR PROJECT PORTFOLIO 2021
Estimated Project Sector Zone Investment (in USD Millions) Headwater and Penstock Works for Drinking Water Junín and Lima 480 Water Supply for Lima Ucayali, Junín, Mass Use of Natural Gas for Central and Power Huancavelica, Ayacucho, 200 Southern Peru Apurímac, Cuzco and Puno Huancayo, El Tambo, and Chilca Wastewater Water Junín 165 Treatment Plants Piura Nueva Frontera 500 kV Substation Electricity Tumbes and Piura 163 Transmission Line Puerto Maldonado Wastewater Treatment Plant Water Madre de Dios 57 Puerto Maldonado - Iberia 138 kV Transmission Line and Valle del Chira 220/60/23 kV, 100 Electricity Madre de Dios and Piura 50 MVA Substation Estimated Total Capex 1,115
Source: ProInversión (January 2021) Sector 116 3 Analysis
The Hydrocarbons Sector has become one of barrels of oil. The same Annual Book informs that the industries with the largest amount of private the hydrocarbon resources of the country are investment initiatives in the country. In 2019, estimated in 23.143 billion barrels of crude oil, oil and natural gas exploration and exploitation 859 million barrels of natural gas liquids, and 31 HYDROCARBONS investments totaled USD620 million (4% higher than trillion cubic feet of natural gas, which combined 5 in 2018), USD562 million of which were invested are equivalent to 29.169 billion barrels of oil. If in exploration and USD58 million in exploration. we compare the estimated hydrocarbon resources Taking the official figures published by the Ministry with the estimated hydrocarbon reserves, there of Energy and Mines (MINEM) in the Annual Book are major opportunities for exploration in Peru, to of Hydrocarbon Reserves of December 2018, discover new proven hydrocarbon reserves. the proven reserves are estimated in 344 million barrels of crude oil, 514 million barrels of natural The Hydrocarbons Sector grew by 4.6% in 2019. A gas liquids, and 12 trillion cubic feet of natural gas, drop of 11.1% is estimated for 2020, with a rapid which combined are equivalent to 2.626 billion recovery of 6.8% by 2021.
EVOLUTION OF MACROECONOMIC INDICATORS OF THE HYDROCARBONS INDUSTRY (IN USD MILLIONS)
5,000
4,000
3,000
In USD Millions 2,397
2,000 2,352
1,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Hydrocarbons GDP Crude Oil and Byproducts Exports
Source: Ministry of Energy and Mines (MINEM)
OIL PRODUCTION (THOUSANDS OF BARRELS PER DAY)
80 72.7 69.5 66.7 69.3 62.9 58.0 60 53.0 48.9 43.6 40.4 40.0 40
20 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*
Preliminary 2020 Source: Perupetro Sector 117 3 Analysis
OIL PRODUCTION (THOUSANDS OF BARRELS PER DAY)
30,000 26,531 25,387 25,296 25,000 23,984 22,956 21,173 19,339 20,000 17,837 15,900 14,773 15,000 14,522 10,000 5,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*
Preliminary 2020 Source: Perupetro
NATURAL GAS PRODUCTION (IN MILLION CUBIC FEET PER DAY)
1,400 1,350.0 1,299.3 1,250.4 1,179.6 1,200 1,144.2 1,252.2 1,230.8 1,100.0 1,208.9 1,161.0 1,000
800
700.3 600 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*
Preliminary 2020 Source: Perupetro
NATURAL GAS PRODUCTION (IN THOUSAND CUBIC FEET)
600,000 494,431 500,000 474,235 456,407 441,244 457,050 449,244 430,559 424,827 401,169 418,795 400,000
300,000 255,609 200,000
100,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*
*Preliminary 2020 Source: Perupetro Sector 118 3 Analysis
HYDROCARBONS EXPORT (FOB VALUE IN USD MILLIONS)
Petroleum and Natural Gas 2012 2013 2014 2015 2016 2017 2018 2019 2020* Crude 579 538 496 120 24 26 139 122 149 Derivatives 3,086 3,361 3,280 1,733 1,669 2,560 2,858 2,372 649 Natural Gas 1,331 1,372 786 449 523 772 1,042 623 370 Total 4,996 5,271 4,563 2,302 2,216 3,358 4,039 3,117 1,100
*As of October 2020 Source: National Superintendency of Customs and Tax Administration (SUNAT)
HYDROCARBONS EXPORT BY COUNTRY OF DESTINATION (IN PERCENTAGE)
United States Japan China 22% 13% 8%
South Korea Chile Others 13% 10% 35%
*As of November 2020 Source: Ministry of Foreign Trade and Tourism (MINCETUR)
OIL CONTRACTS
Contract 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Exploration 68 66 62 60 50 44 41 26 26 14 13 13 Exploitation 19 19 20 20 24 24 25 25 20 27 28 26 Total 87 85 82 80 74 68 66 51 46 41 39 39
Source: Ministry of Energy and Mines (MINEM)
PERFORATED WELLS
Well 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Development 147 214 222 197 85 101 81 46 135 170 187 38 Confirmatory 6 3 5 2 2 0 3 0 0 0 3 0 Exploratory 6 6 15 9 7 12 4 1 4 5 3 1 Total 159 223 242 208 94 113 88 47 139 175 193 39
Source: Ministry of Energy and Mines (MINEM)
EY and the Ministry of Foreign Affairs (MRE) prepared a specialized Oil and Gas Investment Guide specialized. It can be downloaded for free at here. Sector 119 3 Analysis
The construction sector is one of the most The construction sector increased by 1.5% in important and dynamic sectors of the Peruvian 2019. In 2020, a drop of 15.6% is expected, while economy, as it directly contributes to the creation a pronounced recovery of 17.4% is estimated for of basic infrastructure. Growth in this sector has 2021, due to higher public and private investment, CONSTRUCTION been driven by higher income being earned in which will boost the execution of works. 6 households, public and private investments, and improved financing terms for housing acquisition.
EVOLUTION OF THE CONSTRUCTION SECTOR
35,000 45% 31,356 31,960 31,334 31,812 31,521 30,101 29,190 29,748 30,000 28,779 35% 26,849 24,848 25,000 23,993 25% 15.8% 17.4% 20,000 15% 17.8% 9.0% 5.3% 15,000 1.9% 2.3% 1.5% 5% -3.1% 3.6% -5.8% 0% 10,000 -5%
5,000 -15% -15.6% -25% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010 2020* 2021* Construction GDP (In PEN Millions) Construction GDP (Percentage Change)
*December 2020 Inflation Report Source: Central Reserve Bank of Peru (BCRP)
TOTAL CEMENT DISPATCH (THOUSANDS OF MT)
12,000 10,648 10,332 10,516 10,037 9,915 10,008 10,000 9,122 8,000
6,000
4,000
2,000 2014 2015 2016 2017 2018 2019 2020
Source: Cement Manufacturers' Association (ASOCEM) Sector 120 3 Analysis
The manufacturing sector has been one of the 17.2% in non-primary manufacturing; however, for hardest hit by the quarantine imposed in an attempt the years 2021-2024, the sector would grow at an to halt the spread of COVID-19. In 2020, a drop of average rate of 7.4%. 1.7% is expected in primary manufacturing and of MANUFACTURING7 MANUFACTURING SECTOR GDP 2010-2019 (IN USD BILLIONS) 25.8 25.0 23.8 24.7 22.3 21.1 20.3 20.4 19.1 19.2 19.3 20.0 20.0 18.2 18.1 16.4 16.7 15.0 14.2 14.2 14.6 14.5 15.0
10.0 6.7 6.6 5.6 5.6 5.0 5.1 5.4 5.8 5.4 5.0 4.7 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Manufacturing GDP Primary Manufacturing GDP Non-Primary Manufacturing GDP
Source: Central Reserve Bank of Peru (BCRP)
MANUFACTURING EXPORTS BY GROUPS OF PRODUCTS 2020* (IN USD MILLIONS)
Chemicals 1,393 Textile 897 Steelmaking and Metallurgy 760 Nonmetallic Mining 417 Metalworking 401 Wood and Paper 210 Miscellaneous (including Jewelry) 131 Hides and Leather 4
200 400 600 800 1,000 1,200 1,400
*As of November 2020 Source: National Superintendency of Customs and Tax Administration (SUNAT)
IMPORTS FOR THE INDUSTRY 2020* (IN USD MILLIONS)
Raw Materials and Intermediate Goods for Industry 10,087 Capital Goods for Industry 6,541 Fuels, Lubricants, and Related Products 2,842 Transportation Equipment 1,927 Raw Materials and Intermediate Goods for Agriculture 1,495 Construction Materials 1,070 Capital Goods for Agriculture 140
2,000 4,000 6,000 8,000 10,000 12,000
*As of November 2020 Source: National Superintendency of Customs and Tax Administration (SUNAT) Sector 121 3 Analysis
According to the Ministry of Economy and Finance (MEF) in recent years, the country's economic growth has developed largely due to private spending, which is in turn broken down into private TRADE AND consumption and private investment. In 2019, the 8 trade industry grew by 3.0% and it is estimated that DOMESTIC the 16.2% fall in 2020 will be offset by a recovery of CONSUMPTION 18.4% in 2021.
EVOLUTION OF TRADE PRODUCTION (PERCENTAGE CHANGE)
20 18.4
10 9.7 8.8 6.7 5.9 4.4 3.9 1.8 2.6 3.0 1.0 0
-10
-16.2 -20 2019 2010 2011 2012 2013 2014 2015 2016 2017 2018 2020* 2021*
*December 2020 Inflation Report Source: Central Reserve Bank of Peru (BCRP)
EVOLUTION OF PRIVATE CONSUMPTION (PERCENTAGE CHANGE)
10 8.7 8.8 6.1 6.0 5.3 5 4.1 3.8 3.4 3.3 3.0 2.0
0
-5
-10 -9.8
-15 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* 2021*
*December 2020 Inflation Report Source: Central Reserve Bank of Peru (BCRP) Sector 122 3 Analysis
FOOD AND BEVERAGES
The food industry in Peru has been primarily driven by the increased purchasing power of the population, influenced by job growth and consumer credit provided by the financial system. Additionally, price stability is highly consistent in the food and beverage consumption division.
FOOD CONSUMPTION PROFILE
100% 90% 80% 70% 60% 50% 40% 30% 20% 10%
2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19
Wheat Meat Butter Fresh Dairy Secondary Grains Pork Whole Milk Powder Sweeteners Rice Poultry Cream Powder Vegetable Oils Beef Oilseeds Roots and Tubers Eggs Cheese
Source: Bioenergy and Food Security (BEFS) – Technical Compendium, Vol. 1
SPENDING ON FOOD AND BEVERAGES IN PERU 2018-2024 (IN PEN BILLIONS)
Indicator 2018 2019* 2020* 2021* 2022* 2023* 2024* Food 89.48 94.85 101.29 103.96 107.7 114.44 121.63 Non-alcoholic Beverages 4.84 5.13 5.47 5.62 5.82 6.18 6.57 Alcoholic Beverages 2.33 2.44 2.06 2.32 2.49 2.63 2.78
*Estimated Source: Fitch Solutions Sector 123 3 Analysis
The modern retail channel has undergone During the first half of 2020, half of all stores were significant growth, making it a country with open to the public. However, due to the restrictions potential for investment in the sector. In 2019, in place, shopping centers were operating at just the Global Retail Development Index ranked over 50% capacity. Lifestyle shopping centers Peru second in Latin America and thirteenth registered the highest operativity levels, with 65% worldwide, as a country with a developing retail of all stores open, while community shopping consumer market. centers reported lower operating levels, at an average of 24%. During the first half of 2020, the retail sector was affected by reducing its availability of access. DISTRIBUTION OF STORE OPERATIVITY BY It is estimated that sales for this year will total TYPE OF SHOPPING CENTER around PEN17 billion, representing a decrease of 40% over 2019. Type Operativity Super Regional 62% E-COMMERCE GROWTH Regional 60% (ELECTRONIC COMMERCE) Community 24% E-commerce has grown significantly over the last Lifestyle 65% ten years. In 2009, Peru accounted for just 1.7% Average 53% of all e-commerce in the region, while by 2019 Source: Colliers International Peru it had risen to 5%, with a total of USD4 billion in sales, placing Peru in sixth place in online sales in Latin America.
PURCHASE VOLUME AND E-COMMERCE SHARE BY COUNTRY 2019
5.0% 30,000 27,730 5% 24,150 25,000 4%
20,000 3.0% 3.0% 2.8% 3.0% 3% 15,000 2.3% 2% 10,000 8,200 7,680 7,000 1% 5,000 4,000
Brazil Mexico Argentina Colombia Chile Peru
E-Commerce Percentage in Total Retail B2C E-Commerce (in USD Millions)
Source: Colliers International Peru Sector 124 3 Analysis
AGRICULTURE AND LIVESTOCK
The agriculture and livestock sector grew by 3.4% AGRICULTURAL AND LIVESTOCK PRODUCTION in 2019, thanks to the higher supply of products BY SUB-SECTOR AND MAJOR PRODUCTS IN AGRICULTURE aimed at both foreign and domestic markets. THOUSANDS OF TONS The sector is expected to continue growing in the 9 January - September AND upcoming years at a rate of 0.7% for 2020 and 2.7% Major Products 2019 2020 Var. % for 2021. AGRIBUSINESS Agricultural Sub-Sector Sugarcane 7,936 7,431 -6.4% GROSS VALUE OF AGRICULTURAL AND Alfalfa 5,432 5,865 8.0% LIVESTOCK PRODUCTION (IN PEN MILLIONS) Potato 4,604 4,614 0.2% Activity 2018 2019 2020* Unhulled rice 2,613 2,872 9.9% Agriculture 22,019 22,592 18,007 Banana 1,686 1,677 -0.6% Livestock 14,098 14,669 10,893 Cassava 920 965 4.9% Agriculture & Livestock 36,117 37,261 28,900 Hard yellow maize 986 855 -13.3% Oil Palm 651 661 1.5% *As of September 2020 Source: Ministry of Agriculture and Irrigation (MINAGRI) Avocado 484 524 8.4% Tangerine 431 457 6.0% Onion 449 441 -1.8% Orange 413 416 0.8% Pineapple 401 416 3.9% Grapes 381 387 1.7% Coffee pergamino 357 367 2.8% Corn / maize 338 344 1.8% Starchy corn 301 315 4.5% Asparagus 258 268 4.0% Mango 303 252 -16.9% Lemon 228 223 -1.9%
Livestock Sub-Sector Milk 1,625 1,642 1.0% Ave 1,600 1,582 -1.2% Eggs 363 370 1.9% Bovine meat 286 276 -3.4% Pork meat 171 177 3.0% Sheep meat 65 63 -3.6%
Source: Ministry of Agriculture and Irrigation (MINAGRI) Sector 125 3 Analysis
EVOLUTION OF MACROECONOMIC INDICATORS OF THE AGRICULTURAL AND LIVESTOCK SECTOR (IN PEN MILLIONS)
35,000 28,642 29,553 30,000 25,294 25,963 26,624 23,944 24,216 24,540 22,517 25,000 20,784 21,656 20,000
15,000
10,000 5,469 2,053 3,157 3,546 5,000 2,545 2,743 2,341 2,843 2,655 1,964 2,137 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
GDP Exports
Sources: National Institute of Statistics and Information (INEI), National Superintendency of Customs and Tax Administration (SUNAT)
The Agricultural and Livestock Unit is defined as AGRICULTURAL UNITS BY REGION the land or group of lands used for agriculture and (IN THOUSANDS) livestock production. Throughout the territory of the country, there are agriculture and livestock Cajamarca 340 units that take advantage of each one of the Puno 215 climate characteristics and ecological areas. Cusco 182 Áncash 170 Piura 143 AGRICULTURAL & LIVESTOCK UNITS PER Junín 136 NATURAL REGION La Libertad 127 Ayacucho 114 Highlands Huánuco 107 64% San Martín 91
Amazon Jungle Apurímac 83 20% Lima 79 Huancavelica 75 Coast 16% Amazonas 70 Loreto 68 Lambayeque 59 Source: IV Agriculture and Livestock Census 2012 - Ministry of Arequipa 58 Agriculture and Irrigation (MINAGRI) Pasco 33 Ica 33 Ucayali 26 Tacna 22 Moquegua 14 Tumbes 8 Madre de Dios 7 Callao 3
Source: IV Agriculture and Livestock Census 2012 - Ministry of Agriculture and Irrigation (MINAGRI Sector 126 3 Analysis
TRADITIONAL AND NON-TRADITIONAL AGRICULTURAL EXPORTS (IN USD MILLIONS)
7,000
6,000
5,000
4,000 6,303 6,001 5,856 3,107 4,916 5,085 3,000 3,317 4,461 4,590 3,445 2,425 2,000 1,995 1,000 1,671 1,073 636 974 777 841 689 874 823 763 774 658 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* Traditional Non-Traditional
*As of November 2020 Source: National Superintendency of Customs and Tax Administration (SUNAT)
AGRICULTURAL AND LIVESTOCK EXPORTS BY COUNTRY OF DESTINATION AS OF SEPTEMBER 2020 (%)
United States Spain Ecuador Others 32% 7% 4% 34%
Netherlands England China 16% 4% 3%
Source: Ministry of Agriculture and Irrigation (MINAGRI)
MAIN AGRICULTURAL EXPORT DESTINATIONS AS OF SEPTEMBER 2020 (IN USD MILLIONS)
United States 1,638
Netherlands 825
Spain 339
England 220
Ecuador 189
China 169
500,000 1,000,000 1,500,000 2,000,000
Source: Ministry of Agriculture and Irrigation (MINAGRI) Sector 127 3 Analysis
AGRIBUSINESS
Peru's immense biodiversity allows for the farming nutritional qualities. There is also a potential market of many interesting endemic agricultural crops for legumes such as fava beans and different kinds for the international market, many of which have of corn, not to mention potatoes, which are grown already succeeded in positioning themselves, in over 2,000 varieties in Peru, the vast majority offering niches for potential investments. of which are unknown outside Peru. The Amazon jungle, for its part, is home to exotic fruits such Peru, and especially its Andean territory, produces as cocona, guanabana or soursop, aguaje, and a variety of grains, such as kiwicha, quinoa, tarwi, camucamu, all of which are increasingly consumed and cañihua, among others, which are highly in Asian countries. desirable due to their high protein content and their
MAIN AGRICULTURAL EXPORTS AS OF SEPTEMBER 2020
In USD In USD Description Description Millions Millions Avocados, fresh or dried 753 Vegetables prepared or preserved 57 Fresh grapes 441 without frozen, other Cranberries, blueberries and other fruits 381 The other paprika 52 of the genus vaccinium, fresh Onions and shallots, fresh or chilled 48 Coffee, unroasted, 360 not decaffeinated, others Vegetables, fruits and other edible parts of plants, prep. or preserved in 47 Asparagus, fresh or chilled 240 vinegar or acetic acid Mangoes and mangosteens, fresh or dried 224 Tangerines (including tangerines Other citrus 186 45 and satsumas) Bananas including fresh cavendish 116 Evaporated milk without sugar valery bananas 44 Preparations used for feeding animals 108 or sweetener Frozen mango w / sugar Bake products, Cake or cookie Sweets 43 106 (mangifera indica l) Passion fruit juice 35 Other cocoa beans, whole or broken, raw 102 (passion fruit) (passiflora edulis) Other quinoa, except for sowing 94 Solid state refined sugarcane 32 Other fruits and other fruits, uncooked or 72 Piquillo pepper (capsicum annuum) 31 cooked in water or steam Prepared or preserved asparagus, Semi-milled or blanched rice, whether 69 30 not frozen or not polished or glazed Other fruits or other fresh fruits 63 Artichokes (artichokes) 61 Ethyl alcohol without denaturing w / alcoholic degree by volume greater than 57 or equal to 80% vol
Source: Ministry of Agriculture and Irrigation (MINAGRI) Sector 128 3 Analysis
PERU IN THE INTERNATIONAL EXPORTERS' RANKING Peruvian fruits and vegetables are gaining ground Crops 2018 in international markets, with exports growing at a Asparagus 1 solid pace, with some of the producers' associations Dry Beans 1 in the sector standing out. Peru is now the number one producer of asparagus and organic bananas in Quinoa (2020) 1 the world. Maca 1 Fresh Blueberries, and Citrus Fruit Peels For the fifth consecutive year, Peru is the world's 3 (Lemon) leading exporter of quinoa. These exports mainly Fresh Mangoes 4 go to the United States and Canadian markets. Likewise, blueberry exports have shown a Canned Palm Hearts 4 significant increase of 227% in the past two years. Canned Olives 5 Scallops 5 Fresh Grapes 6 Fresh Mandarins 7 Cuttlefish, Pufferfish, Squid, and Giant Squid 8
Source: Association of Peruvian Agricultural Producers' Unions (AGAP)
EVOLUTION IN QUINOA EXPORTS (IN USD THOUSANDS OF FOB VALUE)
196,379 200,000 51,050 100,000 42,206 49,256 Tons 44,339 51,484 37,806 160,000 36,939 10,000 143,338 7,689 10,540 18,600 135,519 4,838 121,562 124,993 2,756 120,000 2,133 103,001 1,000 94,165 79,118 80,000 100
40,000 30,323 10 13,138 24,025 5,077 7,291
FOB Exports in Thousands of USD of FOB Exports in Thousands 1 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2008 2020* Exports Quinoa Export in Tons
*As of September 2020 Source: Ministry of Agriculture and Irrigation (MINAGRI) Sector 129 3 Analysis
EVOLUTION IN BLUEBERRY EXPORTS (IN USD THOUSANDS OF FOB VALUE)
124,876 900,000 100,000 73,903 820,394 Tons 800,000 64,107 10,210 27,240 700,000 43,007 10,000
600,000 554,948
500,000 1,513 2,889 1,000 400,000 360,942 381,139
300,000 FOB Exports in Thousands of USD of FOB Exports in Thousands 237,120 100 200,000 95,804 100,000 48 30,282 6 7 17,386 32 84 465 1 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*
Exports Blueberry Export in Tons
*As of September 2020 Source: Ministry of Agriculture and Irrigation (MINAGRI)
The number of agricultural export companies has more than doubled between 2001 and 2019. They jumped from 843 firms in 2000 to 2,012. In relation to the number of exporting companies, in 2019, there were 115 exporters who exported over USD10 million, accounting for 69.6% of total exports, while 468 companies exported between USD1 million and USD10 million, accounting for 26% of exports. There were 638 companies that exported between USD100,000 and less than USD1 million, accounting for 4% of exports. Finally, there were 791 companies that exported less than USD100,000, accounting for 0.4% of exports. Sector 130 3 Analysis
Peru has a wide range of hydrobiological resources, and is the world's top producer of fishmeal and fish oil.
FISHERIES In 2019, the fishing sector reported a drop of 10 25.9% due to a lower landing of saltwater and freshwater species. A sustained growth of 3.0% is forecasted for 2020, and 8.5% for 2021.
EVOLUTION OF FISHERY ACTIVITY
GDP Fisheries: In PEN Millions % Change
52.90% 47.7% 2,892 2,837 2,436 2,445 2,352 2,166 24.80% 2,042 2,103 1,960 1,921 1,891 1,762 15.90% 1,836 3.00% 4.70% 3.00% 3.40% -10.10% -19.60% -25.9% -32.20% -27.90% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* Sea Surface Widespread, Temporary Presence of a Lower landing Greater landing Temperature scattered suspensions moderate El Niño of maritime of saltwater (SST) with distribution of phenomenon catch, mainly species, of anchoveta positive anchoveta and for species specifically for anomalies other pelagic fishing in the Marked drop in destined for industrial use. in northern resources, south food (plankton) indirect human Increases were zone, stable occurring far and anchoveta consumption also registered in center, from the coast, displacement (manufacture in catch for and negative due to greater- of fishmeal and direct human in south than-normal fish oil) consumption, cooling of coastal either fresh or waters cured. Frozen freshwater fish likewise exhibited an upward trend
Lower Significant Beneficial April: Typical Following the Fewer saltwater availability of extraction of cooling of conditions presence of the fish intended for anchoveta in anchoveta seawater along marking the start Coastal El Niño indirect human recent months during the two the coast of a moderate phenomenon in consumption, as due to positive authorized during the Coastal El Niño early 2017, a well as freshwater anomalies in fishing seasons second half of event higher anchoveta fish, due to a SST. the year catch was reported lower catch of 169 actual May - December: species for fresh New individual fishing days Increase in El Higher extraction consumption per-vessel quota compared to Niño magnitude of species destined system 134 reported in from moderate to for freezing 2010 strong
*December 2020 Inflation Report Source: Central Reserve Bank of Peru (BCRP), National Institute of Statistics and Information (INEI) Sector 131 3 Analysis
RANKING OF WORLD PRODUCTION OF FISHMEAL – ESTIMATE FOR 2020 (IN THOUSANDS OF METRIC TONS)
Peru 1,110
European Union 460
Vietnam 460
Chile 370
China 350
Thailand 340
United States 255
Norway 230
Japan 180
Morocco 171
100 200 300 400 500 600 700 800 900 1,000 1,100 1,200
Sources: Indexmundi, US Department of Agriculture
FISHMEAL (IN THOUSANDS OF METRIC TONS)
2,000 1,931 1,638 1,415 1,432 1,500 1,342 1,399 1,348 1,119 1,000 787 854 852 760 811 653 574 525 500 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*
*As of September 2020 Source: Ministry of Industries and Fisheries (PRODUCE)
FISH OIL PRODUCTION (IN THOUSANDS OF METRIC TONS)
400 336 310 290 293 288 300 280 268 196 200 174 170 102 103 109 94 100 84 80 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2005 2006 2007 2008 2020*
*As of September 2020 Source: Ministry of Industries and Fisheries (PRODUCE) Sector 132 3 Analysis
PROCESSING OF HYDRO-BIOLOGICAL AND MARITIME PRODUCTS BY TYPE OF USE (IN THOUSANDS OF METRIC TONS)
Type of Use 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* Direct Human Consumption 318 523 471 420 457 380 364 342 418 568 396 • Canned 78 127 71 76 57 50 58 47 65 86 70 • Frozen 222 358 381 343 392 309 285 295 323 470 314 • Cured 11 8 8 23 25 28 21 - 30 12 12 Indirect Human Consumption 962 1,973 1,050 1,289 621 940 742 839 1,700 920 654 • Fishmeal 787 1,638 854 1,119 525 840 650 750 1,432 811 574 • Crude Oil 174 336 196 170 97 100 92 89 268 109 80 Total 1,279 2,496 1,521 1,708 1,079 1,320 1,106 1,181 2,118 1,488 1,050
*As of September 2020 Source: Ministry of Industries and Fisheries (PRODUCE)
FISHMEAL AND FISH OIL EXPORTS (IN USD MILLIONS)
2,000 1,610 1,780 1,770 1,563 1,458 1,509 1,500 1,335 1,149 1,364 1,000 1,080 999 542 420 500 274 333 343 395 330 375 301 270 344 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*
Fishmeal Fish oil
*As of November 2020 Source: National Superintendency of Customs and Tax Administration (SUNAT)
FISHMEAL EXPORTS BY COUNTRY OF FISH OIL EXPORTS BY COUNTRY OF DESTINATION AS OF AUGUST 2020 DESTINATION AS OF AUGUST 2020
Belgium Netherlands China Germany 26% 5% 77% 4% Denmark Australia Japan Others 7% 5% 5% 10% Chile Others 7% 44% Vietnam 4% China 6%
Source: National Superintendency of Customs and Tax Administration (SUNAT) Sector 133 3 Analysis
It is estimated that Peru's economic growth infrastructure reduces the effect of the distance is closely linked to the progressive reduction between regions, resulting in the full integration of of its shortcomings in terms of infrastructure. the domestic market, connecting at a lower cost Peru has recently begun to take the necessary with markets in other countries and regions. TRANSPORTATION steps to improve this sector, focusing mainly on transport, electricity, water, and communications 11 Together with the Ministry of Foreign Affairs (MRE) AND infrastructure, with the intention of promoting and ProInversión, EY has developed the Guide to new investments. Therefore, the development of COMMUNICATIONS Investing in Infrastructure Projects in Peru, with transportation and communications will impact details on the projects scheduled for the coming positively and directly on the development of other years. It can be downloaded for free at here. sectors such as mining. In addition, investment in
Pacific Ocean Colombia Puerto Rico
Piura Refinería Iquitos Tumbes Loreto Piura Ports Lambayeque Amazonas Cajamarca Ica Brazil La Libertad San Martín Roads Pacific Ocean Huánuco Áncash Ucayali ncash Pasco IIRSA Highways - Peru Junín Madre de Dios Pacific Ocean Cusco Conchán Refinery Lima Huancavelica Camisea Maritime Puno Terminal San Martín Ica Apurimac
Ayacucho Bolivia Arequipa
Moquegua
Tacna Chile Sector 134 3 Analysis
TRANSPORTATION SECTOR
Item U.M 2012 2013 2014 2015 2016 2017 2018 Infrastructure - Road Network Km 140,672 156,792 165,467 165,372 165,905 166,765 168,473 - Railway Network Km 1,928 1,928 1,940 1,940 1,940 1,940 1,940 - Airports Unit 135 138 141 126 134 125 128 - Ports Unit 30 47 47 47 85 87 90 Vehicular Fleet - Automotive Unit 2,137,837 2,287,875 2,423,696 2,544,133 2,661,719 2,786,101 2,894,327 - Locomotives Unit 92 95 89 92 116 107 111 - Aircraft Unit 323 316 363 372 383 355 360 - Ships Unit 899 1,222 980 886 880 717 481
Source: Ministry of Transportation and Communications (MTC)
Peru has given priority to the development of TRANSPORT MATURE SECTOR transport infrastructure (road, railway, port, and PROJECT PORTFOLIO 2021 airport) to increase competitiveness and set a In USD logistics hub that will integrate Latin America Project Millions with the Asia-Pacific Economic Region. These investments aim to modernize the country's Huancayo - Huancavelica Railroad 263 infrastructure, reducing logistics costs and San Juan de Marcona Terminal Port 637 enhancing the use of Free Trade Agreements Lima Peripheral Ring Road 1,965 (FTAs) signed by the country to increase Peru's integration with world markets. According Source: ProInversión (January 2021) to the Private Investment Promotion Agency (ProInversión) the portfolio of mature projects for 2021 totals USD2.9 billion. Sector 135 3 Analysis
AUTOMOTIVE
The Peruvian car parc as of 2018 is 2.9 million vehicles. In the last five years, annual sales of new vehicles have exceeded 125,000 units. In 2020, annual sales added 125,090 new units, which were registered in the Peruvian automotive fleet.
TOTAL VEHICLE SALES (THOUSANDS OF UNITS)
300
250 201.3 190.7 187.1 200 180.3 168.6 173.1 170.0 165.8 150.0 150 120.8 125.0
100 92.5 76.9 51.0 50 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Peruvian Automotive Association (AAP)
VEHICLE SALES BY CATEGORY
350,000
300,000 284,411 286,117 285,661 276,675 266,587 267,516 250,000
200,000 163,668 156,546 153,876 148,435 150,000 151,997 112,181 100,000
50,000 15,540 16,144 16,613 17,398 16,650 12,909 2015 2016 2017 2018 2019 2020
Light Vehicles Light Commercial Vehicles Heavy Vehicles
Source: Peruvian Automotive Association (AAP) Sector 136 3 Analysis
COMUNICATIONS SECTOR
In recent years, through the investments performed, the density of landlines and mobile telephone lines has increased significantly:
Landline Mobile Telephone Year Density Density Lines in Operation Lines in Operation (Line x 100 Inhabitants) (Line x 100 Inhabitants) 2010 3.0 10.3 29.0 101.7 2011 3.0 10.2 32.3 112.1 2012 3.1 10.6 29.4 100.9 2013 3.1 10.5 30.0 101.9 2014 3.0 10.2 31.9 107.4 2015 3.0 9.9 34.2 114.2 2016 2.9 9.7 37.7 124.6 2017 2.9 9.6 38.9 127.3 2018 2.7 8.9 42.2 136.5 2019 2.5 8.0 39.8 127.8 2020* 2.4 7.8 37.0 118.3
*As of June 2020 Source: Supervisory Board for Private Investment in Telecommunications (OSIPTEL)
LANDLINES AND MOBILE TELEPHONE LINES IN SERVICE (IN MILLIONS)
45 42.2 38.9 39.8 40 37.7 34.2 45 32.3 31.9 37.0 29.0 29.4 30.0 30 24.7 25 21.0 20 15.4 15 8.8 10 3.1 3.1 5 2.4 2.7 2.9 3.0 3.0 3.0 3.0 3.0 2.9 2.9 2.7 2.5 2.4 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* Landlines Mobile Telephone
*As of June 2020 Source: Supervisory Board for Private Investment in Telecommunications (OSIPTEL) Sector 137 3 Analysis
Through the Telecommunications Investment Fund (FITEL) actions are being developed aimed at bridging the digital gap in essential public telecommunications services in rural communities and preferential places of social interest.
July 2012 saw the enactment of Law 29904 - Act for the Promotion of Broadband and Construction of Optical Fiber Backbone. The National Optical Fiber Backbone includes the installation, operation, and maintenance of approximately 13,400 km of optical fiber, to connect 180 provincial capitals in the country. Likewise, in 2020, ProInversión incorporated the “1750 – 1780 MHz and 2150– 2180 MHz Bands” and “2300 – 2330 MHz Band” projects into the Private Investment Promotion Process. This project, which involves a capital expenditure of USD291 million, involves the development of infrastructure that supports 4G, 5G, or higher technologies, which will offer better coverage and data capacity. Sector 138 3 Analysis
TOURISM
Peru is a privileged tourist destination While the quarantine imposed to stop the spread worldwide, ranked among the top preferred of COVID-19 brought the sector to a halt, tourism TURISMO, places in the world for its authenticity, art and activities restarted in October while complying 12 culture, history and natural beauty, in addition with the health protocols defined for the sector. GASTRONOMÍA to the famous tourist attractions of Machu With the goal of boosting the recommencement Y HOTELERÍA Picchu and the Amazon Jungle, declared World of activities, the government has created a Heritage Sites. Tourism is extremely important Business Support Fund (FAE) with PEN7.5 billion to the country's development, given that it (approximately USD2.14 billion) in backing that will focuses on a range of economic sectors, such be in force during 2021. as passenger transportation, lodging, food and beverage services, production, travel agencies, The foreign currency generated by incoming trade, and more. tourism has trended upward over the years, hitting USD4.784 billion in 2019.
FOREIGN CURRENCY GENERATED BY TOURISM (IN USD MILLIONS)
6,000 4,784 4,505 5,000 4,303 4,439 4,140 3,908 4,000 3,916 3,073 2,814 3,000 2,475 2,000
1,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: Ministry of Foreign Trade and Tourism (MINCETUR)
ARRIVAL OF INTERNATIONAL TOURISTS (IN MILLIONS)
4.4 4.4 4.0 3.7 3.5 3.2 3.2 2.9 2.6 2.3
0.9 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010 2020*
*As of November 2020 Source: Ministry of Foreign Trade and Tourism (MINCETUR) Sector 139 3 Analysis
According to the Ministry of Foreign Trade and Tourism (MINCETUR) a total of 4.0 million international tourists visited Peru in 2019. As for domestic tourism, 54.9 million people took trips in 2019.
Among international tourists visiting Peru, 27% come from Chile; 15% from the United States; 8% from Ecuador; 5% from Colombia and Argentina; and 4% from Brazil and Spain.
PROVENANCE OF TOURISTS VISITING PERU 2019 (IN MILLIONS OF ARRIVALS)
Spain United States 0.15 0.65
Venezuela 0.09 Colombia 0.22 Ecuador 0.33 Brazil 0.19 Chile 1.19 Argentina 0.21
Source: PromPerú
In 2020, the Jorge Chavez International Airport has been considered the best air terminal of South America by the World Airport Awards. One of the main reasons for receiving this distinction is the high level of satisfaction of the passengers and users, according to the evaluations. This qualification allowed it to be ranked 44th in the world, compared to the 47th position it obtained last year. Sector 140 3 Analysis
Each year, since 1987, the Peruvian Government, • Cusco - Machu Picchu - Inca Trail: “The represented by the Peruvian Commission for the archeological capital of America”, is the main Promotion of Exports and Tourism (PromPerú) and tourist attraction in Peru. Cusco was the largest the private sector, represented by the National city and capital of the Inca Empire. Today, it has Chamber of Tourism (CANATUR), organize the Peru an architecture that blends both the Inca and the Travel Mart (PTM) an event that is the meeting Spanish styles. Its people proudly preserve their point in which tourism promoters of the country customs and traditions. A must-see place is the meet with the international tourism businessmen mystical and enigmatic Machu Picchu (one of the of the world. The purpose of this event is to gather Seven Wonders of the Modern World): the sacred the wholesalers of the main tourism markets in city of the Incas that was officially unveiled to the the world to take part in a meeting with the most western culture in 1911. Due to their historical important producers of tourist services of value and their beauty, both Cusco and Machu the country. Picchu have been considered a Cultural Heritage of Humanity. The first travel culture campaign “What are your plans?” was launched in 2012 with the aim of • Iquitos and the Amazon River: The Amazon promoting domestic travel. It is estimated that the Jungle is an ideal place for nature and biodiversity campaign produced a growth of 15% in the sales tourism lovers, who wish to come into direct of the participating regional companies that add contact with nature. From Iquitos, tourists can up to a total of around 450 companies. In 2014, take a cruise along the Amazon River, exploring this travel culture campaign was recognized by the the protected natural areas such as the Pacaya World Tourism Organization (WTO) awarding Peru Samiria and Alpahuayo Mishana, with exuberant the Ulysses Prize for Excellence and Innovation flora and fauna, ideal for bird watching. in Tourism. • Lake Titicaca and Puno: Puno is located high up The most visited tourist destinations in Peru are in the Andes, on the banks of Lake Titicaca, the shown below: highest navigable lake in the world, inhabited by the Uros and with wonderful landscapes. In the • Arequipa and the Colca Valley: The city of Amantani and Taquile Islands, the tourist can Arequipa is also known as the “White City”. Its share life with its natives and experience firsthand historical center has been recognized as a Cultural their habits and customs. Puno is the folkloric Heritage of Humanity due the architecture of its capital of Peru. Colonial buildings in white stone ashlar. The Colca Valley is one of the protected natural areas with • Lima: Capital of Peru. It is the gastronomic capital beautiful landscapes. Arequipa has one of the best and gateway to Peru. It has a historical center cuisines in Peru. with beautiful colonial buildings, which have been declared the Cultural Heritage of Humanity by the • Chiclayo: The city of Chiclayo is the gateway for UNESCO, and it has the best museums in Peru. the most recent and spectacular archaeological Lima offers a large variety of cultural, folkloric discoveries such as the Lord of Sipán in the Huaca shows, nighttime recreational centers, luxurious Rajada, the Lord of Sicán in Batán Grande – the casinos and different restaurants famous for their Pomac Forest Historical Sanctuary, the Valley Peruvian cuisine. of the Pyramids of Túcume, besides owning the Museum of Royal Tombs of Sipán. Thanks to all of the foregoing features, Chiclayo has become the second favorite destination after Cusco due to its archaeological and historical interest. Sector 141 3 Analysis
• Nazca – Nazca Lines: The only place in the world In 2019, Peru was recognized for the eighth time in the desert sands full of mysticism and mystery running as the Best Culinary Destination of the with jaw-dropping shapes of immense figures and World, according to the World Travel Awards (WTA). spectacularly perfect lines produced by an ancient Gastronomic tourists spend an average of USD130 civilization, having been declared the Cultural per day in 4- and 5-star restaurants. It is estimated Heritage of Humanity by the UNESCO. that Peru received USD1 billion from culinary tourism, creating 320,000 jobs. • Paracas: On the coast of the Pacific Ocean, the National Reserve of Paracas and the Ballestas In 2019 and for sixth year running, a Peruvian Islands are ecological destinations for nature restaurant was recognized as the best restaurant and bird lovers. It also has historical-cultural in Latin America according to the ranking of Latin attractions with the archaeological ruins of the America's 50 Best Restaurants, sponsored by S. Paracas culture. Pellegrino & Acqua Panna. It should be noted that three Peruvian restaurants rank among the Top 10 • Trujillo: The “Spring City” is close to Chan-Chan Restaurants. It should also be noted that Peru offers the most affordable prices in comparison to other (capital of the Chimu nation – 13th Century), one restaurants included in said ranking. of the largest cities of the world built with mud Several international fairs are being carried out and declared the Cultural Heritage of Humanity. in Peru with the purpose of promoting our food Equally important are the archaeological ruins of resources to the world. In 2019, Peru attended the Huaca del Sol y de la Luna (Sun and Moon), El the 17th edition of the Madrid Fusión 2019 Brujo complex and the Lady of Cao. An excellent International Culinary Summit, the 20th “Xantar” destination for historical archaeological tourism. International Culinary Tourism Fair, Arco Madrid 2019, the Ibero-American Culinary Fair (FIBEGA) CUISINE 2019, and Quipu 2019 Peruvian Culinary Week, with a view to positioning the country's Peruvian cuisine is considered one of the most image abroad. important worldwide. Over the years, it has become a “flagship product” due to its quality Throughout the year, Peru has a wide range of and increasing international competitiveness, in different activities to promote cuisine, such as addition to being a cuisine that is rich in tradition Pachamanca Day, National Potato Day, Ceviche and history. Peru is currently experiencing a Day, Peruvian Pork Chicharron Day, Charcoal-Fired gastronomic boom, and 42% of tourists visiting Rotisserie Chicken Day, International Chocolate Day, Peru say that the food is one of the aspects that Peruvian Cooking and Cuisine Day, Peruvian Cacao influence their decision for choosing Peru as a and Chocolate Day, National Cuy Day, Picarón tourist destination. The expansion of the Peruvian Day, Anticucho Day, Salchipapa Day, and Peruvian cuisine reflects on the possibility of doing business, Parrilla Day. whether exporting the supplies, know-how, and skills in its preparation, or representing Peruvian food franchises in a growing number of countries. Sector 142 3 Analysis
Tourism also made significant contributions year of the “Festival Gastronómico del Pato 2019,” round, especially during long weekends, as well the Arequipa International Fair, “Expoamazónica as the different culinary fairs held around the 2019,” “Expoalimentaria,” “Gastromaq Perú,” the country, most notably “Perú, Mucho Gusto” Ilo, 7th Chancho al Palo Festival, the Lima Dessert Fair, the 7th “Queso Helado Arequipeño” Festival 2019, the “Expocumbre Chiclayo 2019” Culinary Fair, the “Gran Subasta Gastronómica,” “Dulce Helado “Perú Mucho Gusto” Tumbes,” PESCAFEST – the Fest,” “Sabores y Costumbres de Mi Tierra,” the First Fish and Aquaculture Fair, the “Huacho Mucho Ica International Grape Harvest Festival, “Second Gusto” Culinary Festival, “Expovraem 2019,” the Mixtura Wanka 2019,”the first French cuisine 12th “Festi Gourmet Ceturgh Perú 2019,” “Trujillo festival, the Ice Cream and Slushy Festival, the Tradición y Sabor,” and the 2019 Christmas Fair. Bread and Sweets Festival, and the first “Maestros del Cebiche 2019” culinary meeting. HOTELS
There were also the Callao 2019 Culinary Expo The total number of beds available has grown Fair, “Otuzco, Fe, Costumbres y Sabores,” the consistently in recent years, rising by 33.2% from “Manos Peruanas” Fair, the “Sabor a Selva” Fair, 2013 to 2019, highlighting tourism investors' the Third “Sabor a Moche 2019” Culinary Fair, response to the increasing demand for lodging. “Gochiso Perú 2019”, and the “Fiesta del Dulce Peruano,” not to mention the “200 Dishes of During the same 2013-2019 period, tourist arrivals Peru's Bicentennial,” the “Danzas y Sabores - Lima and number of nights stayed increased by 19% and Norte 2019” Culinary Festival, the 11th edition 14%, respectively.
COLLECTIVE ACCOMMODATIONS ESTABLISHMENTS BY CATEGORY (2019)
Category No. of Establishments No. of Rooms No. of Bed Places Classified and Categorized Establishments 2,287 60,690 109,791 • Classified and Categorized - 1-star Hotel 446 7,666 12,714 - 2-star Hotel 1,694 35,941 61,884 - 3-star Hotel 980 28,810 53,819 - 4-star Hotel 107 8,249 15,781 - 5-star Hotel 54 6,517 12,221 • Classified Establishments - Youth Hostel 90 1,463 3,452 - Ecolodge 3 75 166 Total 3,374 88,721 160,037
Source: Ministry of Foreign Trade and Tourism (MINCETUR) INCORPORATING A COMPANY IN PERU 4 Incorporating a Company 144 4 in Peru
A minimum of two shareholders is required. Non- domiciled shareholders must appoint an attorney-in- fact in Peru to sign off on the bylaws on their behalf. Funds in local or foreign currency for the initial JOINT STOCK capital contribution must be deposited in a local 1 bank. There is no minimum amount required by COMPANIES the Business Corporations Act (LGS), but financial institutions generally require a minimum initial capital of PEN1,000 (approximately USD300). The capital stock is represented by shares, which are in turn represented by certificates or book entries.
Features:
• Name: Trade Name must include the indication “Sociedad Anónima” or the abbreviation “S.A.” • Limited liability: Shareholders' liability is limited to the par value of the shares they hold. Partners are not personally liable for corporate debts. The guarantee given to the company's creditors consists of the assets themselves. If these are insufficient, the partners are not liable for such fact. • Centralized management: Shareholders' Meetings, Board of Directors, and Chief Executive Officer (General Manager). • Legal Reserve: Minimum of 10% of the distributable profit for each fiscal year, after income tax, until reaching an amount equal to one- fifth of the capital stock. • Stock transfer: The transfer of shares is free, unless otherwise established. A right of first refusal may be established by virtue of the bylaws. • Existence: Death, illness, bankruptcy, and/or retirement or resignation of any shareholder does not cause the dissolution of the corporation. Incorporating a Company 145 4 in Peru
Closely held corporations resemble limited liability companies and must have a minimum of 2 and a maximum of 20 shareholders. Shares cannot be listed on the Public Stock Exchange Registry CLOSELY (RPMV) of the Peruvian Securities and Exchange 2 Superintendency (SMV). HELD CORPORATIONS Features:
• Name: Must include the indication “Sociedad Anónima Cerrada” or the abbreviation S.A.C. • Limited liability: Shareholders' liability is limited to the par value of the shares they hold. Partners are not personally liable for corporate debts. The guarantee given to the company's creditors consists of the assets themselves. If these are insufficient, the partners are not liable for such fact. • Management: Shareholders' Meeting (which may be held without the physical presence of the shareholders) and the General Manager. A Board of Directors is optional. • Legal Reserve: Minimum of 10% of the distributable profit for each fiscal year, after income tax, until reaching an amount equal to one- fifth of the capital stock. • Stock transfer: Limitation on the free transfer of shares. Shareholders have the right of first refusal in the event that shares are proposed for transfer to a third party. This right may be eliminated in the bylaws. A right of first refusal may be established in favor of the corporation itself in the bylaws. Incorporating a Company 146 4 in Peru
Publicly held corporations are basically intended for companies with a large number of shareholders (more than 750) or for which an Initial Public Offering has been made, or which have debts that PUBLICLY can be converted into shares, or in which more 3 than 35% of the capital stock belongs to 175 or HELD more shareholders. These shares of stock must CORPORATIONS be listed on the Public Stock Exchange Registry (RPMV) of the Peruvian Securities and Exchange Superintendency (SMV).
Features:
• Name: Must include the indication “Sociedad Anónima Abierta” or the abbreviation S.A.A. • Limited liability: Shareholders' liability is limited to the par value of the shares they hold. Partners are not personally liable for corporate debts. The guarantee given to the company's creditors consists of the assets themselves. If these are insufficient, the partners are not liable for such fact. • Management: Shareholders' Meetings, Board of Directors, and General Manager. • Legal Reserve: Minimum of 10% of the distributable profit for each fiscal year, after income tax, until reaching an amount equal to one- fifth of the capital stock. • Supervision: Publicly held corporations are subject to the supervision of the Peruvian Securities and Exchange Superintendency (SMV). • Stock transfer: Transfer of shares is completely free. No restrictions or limitations are permitted. It is prohibited to incorporate clauses into the bylaws that impose restrictions on the transfer of shares. Incorporating a Company 147 4 in Peru
Limited liability companies may be established with a minimum of two (2) and a maximum of twenty (20) partners. This type of company does not issue shares. The incorporation procedures are the LIMITED same as those for all other corporations. Its capital 4 is divided into ownership interests, which are LIABILITY accumulative and indivisible. COMPANIES Features:
• Name: Must include the indication "Sociedad Comercial de Responsabilidad Limitada" or the abbreviation "S.R.L." • Limited liability: Partners are not personally liable for corporate obligations. • Management: Partners Meeting and General Management. • Legal Reserve: There is no obligation to make the legal reserve. • Stock Transfer: Transfer of shares in favour of third parties is subject to a preferential acquisition right and must be registered in Public Registries. Unless otherwise established in the corporate bylaws, if the thirty (30)-day term established by law expires and none of the partners has exercised their right of first refusal, the corporation itself may acquire the ownership interests that have been offered. If the Partners Meeting decides not to buy, the offering partner shall be free to transfer its shares to third parties. Incorporating a Company 148 4 in Peru
Branches are secondary establishments via which a corporation, either national or foreign, carries out activities in a location other than its principal place of business. Branches do not have their own BRANCHES separate legal standing. The parent company is 5 liable for the branch's obligations. In the case of branches established by foreign corporations, the agreement for the establishment of a branch adopted by the parent company shall be notarized by the Peruvian consulate and certified by the Ministry of Foreign Affairs (MRE) in Peru, or, failing that, apostilled in its country of origin, so that it can be put into the form of a notarially recorded instrument and registered in the Public Records Office. The registration of the branch requires, among other things, a certificate of good standing of the parent company, duly notarized or apostilled, as applicable. According to the LGS, branches of foreign companies may be transformed so as to be incorporated in Peru under any corporation type regulated by the LGS. TAXES 5 5 Taxes 150
TAX The Tax System in Peru is governed by the In effect, in case of situations of tax evasion, principles of legal confidentiality and those of the SUNAT shall have the faculty to request the SYSTEM equality and respect for the basic rights of the enforced payment of the tax debt, reduction of person. The Constitution enshrines the principle tax credits, tax losses, or the elimination of tax of the non-confiscatory nature of taxes, as well as benefits (including the restitution of taxes unduly guaranteeing the right to tax confidentiality. refunded). In order to implement this power, the Tax Administration shall prove that the taxpayer meets In Peru, the main taxes are levied on income, the following conditions: production and consumption, the circulation of money and equity. There are also other a) The taxpayer—whether individually or jointly and contributions to the Public Healthcare Service and severally with other taxpayers—has engaged in the National Pension System. illegal or deceptive acts to obtain a specific tax result; and The management and collection of taxes is the responsibility of the National Superintendency of b) The use of said deceptive or illegal act causes Customs and Tax Administration (SUNAT) and, legal or economic effects other than tax savings in some cases, the Municipalities or regulatory or advantages equal or similar to those that institutions. would have been obtained through usual or legal acts. The SUNAT has the power to use all the methods of interpretation permitted by law, as well as to However, as from July 12, 2014, the application object to the economic purpose of taxpayers' acts, of the anti-evasion clause has been suspended prioritizing content over the form of the acts. until the Executive Branch, by an Executive Order Analogy in tax matters is prohibited. (Decreto Supremo) endorsed by the Minister of Economy and Finance, establishes the parameters Starting on July 19, 2012, anti-evasion rules were of form and substance for application thereon. introduced into the Tax Code regarding the faculties of the SUNAT in situations considered to be tax Legislative Order (Decreto Legislativo) 1422 was evasion or simulated transactions. published on September 13, 2018, to regulate the procedure for the application of the General Tax Evasion Act. In particular, this order requires the application of this act by a review committee consisting of tax administration officials. The order also expressly incorporates sanctions in application of the General Tax Evasion Act equal to those that apply to miscalculations of tax obligations. Likewise, it states that legal representatives shall be jointly and severally liable if it is found, based on the anti- evasion clause, that the taxpayer has been involved in acts of tax evasion. 5 Taxes 151
TAX Likewise, on May 6, 2019, Executive Order (Decreto Supremo) 145-2019-EF was published, SYSTEM approving the parameters of form and content for the application of the General Anti-Evasion Law and regulating the primary scope for its application to the definitive auditing procedure. The order also establishes a non-exhaustive list of situations in which the General Anti-Evasion Law could be deemed applicable.
Furthermore, Legislative Order (Decreto Legislativo) 1372 created a new obligation for companies, requiring them to have an internal procedure for identifying their final beneficiary, as well as to provide specific information on said beneficiary to the tax administration. The order also includes sanctions in case of failure to comply with said obligations, and the possibility of attributing joint and several liability for such failures to the company's legal representatives.
The following table shows the list of the main taxes in force according to their nature (direct, indirect, and municipal). Each one of these taxes is summarized below.
Direct Taxes Indirect Taxes Municipal Taxes Value Added Income Tax (IR) Property Tax Tax (VAT) Temporary Selective Property Net Assets Tax Consumption Transfer Tax (ITAN) Tax (ISC) Tax on Financial Vehicle Transactions Property Tax (ITF) 5 Taxes 152
A. INCOME TAX (IR) On May 10, 2020, Legislative Order (Decreto Legislativo) 1488 was published, establishing an Income tax is levied on net income and is exceptional, temporary regimen of accelerated determined annually. The tax year begins on depreciation for buildings and structures whose DIRECT January 1 of each year and ends on December construction began on or after January 1, 1 31, with no exceptions. Income tax returns for 2020, and which meet certain conditions; as TAXES corporations, branches, and individuals well as other fixed assets such as plant and must generally be filed by March 31 of the machinery, land transportation vehicles, and following year. data processing equipment acquired during fiscal years 2020 and 2021. Companies domiciled in Peru recognize their inflows and outflows based on the accrual Expenses incurred abroad are deductible criterion. Starting on January 1, 2019, the Tax provided they are necessary for generating Code includes a definition of accrual for purposes income and have been accredited with the of determining income tax, which is not based on respective payment vouchers issued abroad. the provisions of the IFRS (except for any express remissions under the Income Tax Act). Expenses that are not accepted as deductions include, among others, personal expenses, Domiciled Legal Entities assumed income tax (except in the case of interests), tax and administrative fines, Corporations established in Peru are subject donations and reserves, or allowances not to third income tax bracket on a worldwide permitted by law, etc. income basis. Non-domiciled corporations, branches established in Peru, and permanent It should be noted that starting in fiscal year establishments of non-domiciled legal entities 2019, costs or expenses for services received that are located in Peru are only taxed on from non-domiciled companies (whether related Peruvian-source income. or not) must be paid prior to the submission of the tax return to be considered deductible. The corporate income tax rate for domiciled companies is 29.5% and is applied over the net Domiciled companies can select between the income, which is determined after the deduction following two systems to carry forward their of expenses incurred in the generation of income losses: or maintenance of the source. a) Losses can be carried forward for four Dividends received from other domiciled legal consecutive years, beginning with the first entities are not taxed. Dividends received from subsequent year in which the losses arise. non-domiciled legal entities are subject to a tax rate of 29.5%. On an exceptional basis, those companies that have chosen this loss carryforward system In general, subject to certain requisites and may offset the net loss incurred in 2020 for conditions, the deduction of interest, insurance, up to five fiscal years. non-recurring losses, collection, depreciation, and pre-operating expenses, authorized reserves, write-offs and loan loss provision, provision for fringe benefits, retirement pensions, and employee bonuses, etc., is permitted. 5 Taxes 153
b) Losses can be carried forward indefinitely, but Domiciled Individuals with a deduction limit equivalent to 50% of the taxpayer's income for each fiscal year. Under the Peruvian tax system, Peruvian citizens domiciled in Peru are subject to taxation on their Neither loss carrybacks nor the deduction of worldwide income, regardless of the country net losses abroad is permitted. from which it derives, from which payments are made, or the currency in which income is It should be noted that domiciled companies received. By contrast, non-domiciled individuals are obligated to make prepayments on income are only taxed in Peru on their Peruvian-source tax, for an amount determined by comparing income. the monthly installments resulting from the application of one of the following methods, In the case of domiciled individuals, fourth- and whichever is higher: fifth income tax bracket, i.e., the tax on income received for personal work (independent and • Percentage method: Apply 1.5% to the total dependent, respectively), as well as foreign- net income for the month. source income, is determined by applying a cumulative progressive rate, as follows: • Coefficient method: Divide the tax calculated for the previous fiscal year by the total Up to the 2014 Fiscal Year net income for the same fiscal year and Sum of Net Peruvian Source Income and such result shall be named coefficient. The Rate Foreign-Source Income resulting coefficient shall be applied to the Up to 27 Tax Units net income for the month. For the months 15% of January and February, use the coefficient More than 27 up to 54 Tax Units 21% determined based on the calculated tax and More than 54 Tax Units 30% net income of the fiscal year prior to the previous one. From the 2015 Fiscal Year Sum of Net Peruvian Source Income and Notwithstanding the foregoing, it is possible Rate to request the suspension of the obligation to Foreign-Source Income make the referred prepayments, under certain Up to 5 Tax Units 8% circumstances. Legislative Order 1471, More than 5 up to 20 Tax Units 14% published on April 29, 2020, established More than 20 up to 35 Tax Units 17% an exceptional regime that allows for the reduction or suspension of advance payments More than 35 up to 45 Tax Units 20% for the periods of April through July 2020. More than 45 Tax Units 30%
Should the prepayments exceed the annual tax, the excess may be carried forward as credit against subsequent advance and regularization tax payments, or may be refunded to the taxpayer. 5 Taxes 154
For salaries, wages, and any other type of Non-Domiciled Individuals remuneration received for dependent or independent work (fourth- and fifth- income Individuals not domiciled in Peru must pay taxes tax bracket) a non-taxable minimum of 7 Tax only on Peruvian-source income. Units (PEN30,100 or approximately USD8,400) applies. Additionally, there is: In general, Peruvian-source income is considered to include: - A deduction of an additional three Tax Units, subject to certain conditions; • Income received for properties and the rights - A deduction of 20% on income received for related thereto, including that coming from independent work; and their disposal, when the properties are located within Peruvian territory. - A deduction of donations and Tax on Financial Transactions (ITF). • Income received for assets or rights, including that coming from their disposal, when such assets are physically located or the rights are The deduction of further expenses is not economically used in the country; permitted. • Royalties when the assets or rights are Income obtained by domiciled individuals from economically used in the country, or when they the lease, sublease, or assignment of assets are paid by a taxpayer domiciled in the country. (first income bracket) as well as all other capital • Interest, when the capital is placed or incomes (second income tax bracket ) are subject economically used in the country; or when the to an effective rate of 5% of gross income. payer is a taxpayer domiciled in the country. • Dividends distributed by entities domiciled in Dividends distributed by companies incorporated the country. or established in Peru and received by individuals • Civil, commercial, business, and personal work are taxed with the 5% rate. activities conducted in the country;
It should be noted that the retained earnings • The disposal or surrender of marketable/ 1 obtained as of December 31, 2014, which form negotiable securities (shares , ownership part of the distribution of dividends or any other interests, bonds, etc.), when they have been form of profit sharing, shall be subject to a rate issued by entities incorporated or established of 4.1%, while those obtained between January in Peru. 1, 2015 and December 31, 2016 shall be taxed • Technical assistance and digital services at 6.8%. economically used in Peru.
1 Under the provisions of Legislative Order 1262 (in force from January 1, 2017 to December 31, 2019) capital gains deriving from the disposal of assets or other securities representing shares of stock through the Lima Stock Exchange (BVL) are exempted from Income Tax, provided that they meet certain requirements. 5 Taxes 155
• The income obtained by non-domiciled • Acts executed before making any kind of taxpayers from derivative financial instruments foreign investments or doing business of any entered into with domiciled taxpayers whose kind. underlying asset involves the exchange rate • Acts intended to supervise or control the of Peruvian currency compared to a foreign investment or business (data or information currency, provided that the effective term collection, interviews with people from the thereof is less than 60 calendar days. public or private sectors, among others). • Income obtained from the indirect disposal of • Acts related to the hiring of local personnel. shares or ownership interests in the capital • Acts related to the execution of similar stock of legal entities domiciled in the country, contracts or documents. provided that it meets certain requisites. • Those obtained from credit transfers (factoring, For foreigners coming from countries with etc.) in which the acquirer assumes the debtor's which Peru currently maintains agreements to credit risk, when the transferor of the credit or avoid double taxation, such as Japan, Chile, the debt assigned is a domiciled taxpayer. Canada, Brazil, Portugal, South Korea, Mexico and Switzerland; or from countries that are However, starting on January 1, 2019, all part of the Andean Community of Nations income obtained by acquirers of collection (Ecuador, Colombia, Bolivia, and Peru), other rights transfers derived from Public-Private tax provisions may apply. Partnerships (PPP) shall be tax-free.
For non-domiciled individuals, the income tax on the dependent labor income is 30%, with no deductions.
Income received for independent work is subject to an effective tax rate of 24%.
Without prejudice to the foregoing, income earned in their country of origin by non- domiciled individuals entering Peru on a temporary basis in order to perform any of the activities listed below are not considered to be Peruvian-source income. Such activities include: 5 Taxes 156
Non-Domiciled Entities
Peruvian-source income obtained by non- domiciled entities is subject to income tax withholding, depending on the type of income, according to the table shown below:
WITHHOLDING TAX RATE ON INCOME OF NON-DOMICILED COMPANIES
Income Rate • Regarding income obtained until December 31, 2014 considered part of the distribution Dividends and other forms of profit distribution, as well as the of dividends or any other type of profit remittance of profits from the branch sharing, a rate of 4.1% will be applied. • 2015-2016: 6.8% • 2017 and beyond: 5% Interest paid to non-domiciled companies, provided certain • 4.99% requirements are met Interest paid to related companies abroad • 30% Technical assistance services economically used in Peru • 15% Digital services economically used in Peru • 30% Royalties • 30% Capital gains deriving from the disposal of marketable/ negotiable securities through the Lima Stock Exchange (BVL) including: • 5%, unless the exemption provided for by • Disposal, redemption, or surrender of shares, bonds, or other Law 30341 is applicable (see footnote No. 1) securities issued by companies incorporated in Peru • Indirect disposal of shares in Peruvian corporations Capital gains deriving from the disposal of marketable/ negotiable securities outside the Lima Stock Exchange (BVL), including: • 30% • Disposal, redemption, or surrender of shares, bonds, or other securities issued by companies incorporated in Peru • Indirect disposal of shares in Peruvian corporations Credit transfers via factoring or other transactions wherein the acquirer assumes the debtor's credit risk, when the transferor • 30% of the credit or debt assigned is a domiciled taxpayer. Other income deriving from business activities conducted in • 30% Peruvian territory 5 Taxes 157
Income from activities performed Double-Taxation Treaties partially in Peru and partially abroad by non-domiciled companies, including that Los intereses pagados por los contribuyentes obtained by their branches or permanent domiciliados a sus partes vinculadas o empresas establishments are subject to the following asociadas no podrán ser deducidos del Impuesto effective income tax rates: a la Renta en la parte asociada al financiamiento que exceda el resultado de aplicar un coeficiente Effective Income (deuda/patrimonio neto) de “3/1”, al cierre del Activities Tax Rate (%) ejercicio inmediato anterior. Air Transport 0.3% Para los ejercicios 2019 y 2020 se ha modificado Maritime Transport 0.6% la regla anterior para incorporar en el límite a 1 Vessel Lease 24.0% la deducibilidad de los intereses provenientes Aircraft Lease 18.0%1 de financiamientos de partes no vinculadas. Lo Supply of Transport anterior no aplicará a los créditos adquiridos o 4.5% Containers renovados antes del 14 de septiembre de 2018. Demurrage of Transport 24.0% A partir del ejercicio 2021 solamente se admitirá Containers la deducción de intereses por financiamientos (de Insurance 2.1% vinculadas o no) hasta un importe equivalente al International News Agencies 3.0% 30% del EBITDA del ejercicio anterior, concepto Motion Picture Distribution 6.0% que tiene una definición específica para efectos de esta norma (renta neta más ajustes). El interés Television Broadcasting 6.0% Rights Assignment no deducible se podrá arrastrar por los próximos cuatro (4) ejercicios gravables. Telecommunication Services 1.5%
1 The withholding rate for these activities is 10% No se encontrarán sujetos a las reglas mencionadas previamente las entidades financieras y de seguros, contribuyentes cuyos ingresos no superen 2,500 UITs (USD3,250,000 aproximadamente), contribuyentes que desarrollen proyectos de infraestructura, de servicios públicos y otros a través de asociaciones público-privadas o proyectos en activos, así como endeudamientos provenientes de la emisión de valores mobiliarios nominativos que se realicen por oferta pública primaria en el Peru y cumplan ciertas condiciones (oferta pública, entre otros). 5 Taxes 158
Agreements to avoid double taxation generated in the country. Adjustments shall be permitted to reduce the taxable base of the tax Currently, Peru has signed and ratified in Peru solely for transactions with residents in agreements to avoid double taxation with countries with which Peru has an international following countries: Brazil, Chile, Canada, double taxation avoidance treaty, provided such Portugal, South Korea, Switzerland and Mexico. adjustment is permitted in accordance with Also, the Peru is part of the Andean Community, said treaty and is accepted by the Peruvian Tax together with Colombia, Ecuador and Bolivia. Administration. In this sense, Decision 578 is applicable to avoid double taxation between the mentioned The prices of the transactions subject to countries. Unlike the OECD Model, the Decision transfer pricing rules shall be determined in 578 privileges source taxation and uses accordance with any of the internationally exemption as method. accepted methods, for which purpose the one found to best reflect the economic reality of It should be noted that Peru has signed an the operation shall be taken into account. In agreement to avoid double taxation with Japan the event that none of the referred methods is which has been recently entered into force in applicable, other methods may be used, on the January 29, 2021; additionally, Peru has signed condition that proper supporting information is an agreement with Spain, which is pending provided. ratification. Likewise, there are negotiations with Qatar, United Arab Emirates, Netherlands, Italy, Taxpayers subject to the scope of application France, Sweden and the United Kingdom. of transfer pricing laws shall comply with submitting three annual informational tax On June 27, 2018, Peru signed the Multilateral returns, depending on the level of their turnover Convention against bed erosion taxable and the and the amount of the transactions: i) Local transfer of profits, result of the OECD / G20 Report; ii) Master Report; and iii) Country-by- BEPS Project, which it is pending ratification. Country Report.
Transfer Pricing Taxpayers involved in international transactions involving two or more jurisdictions may enter Transfer pricing rules are based on the into Advance Transfer Pricing Agreements arm's length principle as interpreted by the (APAs) with the National Superintendency of Organization for Economic Co-operation and Customs and Tax Administration (SUNAT), Development (OECD) and should be considered which may be unilateral or bilateral. Bilateral solely for income tax purposes. agreements may only be entered into with regard to operations with residents in countries In Peru, these rules not only apply to with which Peru has entered into double taxation transactions between related parties, but also agreements. to transactions with non-cooperative countries or territories or tax heavens and entities subject APAs may also be entered into with regard to a preferential tax system. Note, however, that to transactions carried out between related the value agreed to by the parties must only be companies domiciled in Peru. adjusted when a lower tax payment has been 5 Taxes 159
International Tax Transparency System • It is the property of a taxpayer domiciled in Peru. For such purpose, this shall be Starting on January 1, 2013, the “International understood to be the case when, at the close Tax Transparency System” was incorporated, of the fiscal year, the domiciled taxpayer has— applicable to taxpayers domiciled in Peru who on its own or jointly with its related parties are owners of controlled non-domiciled entities domiciled in the country—a direct or indirect (CNDEs) with regard to the passive income of the share in over 50% of the capital stock, or the CNDEs, provided that they are subject to income results, or voting rights of said entity. tax in Peru for foreign-source income. Likewise, the presumption of a share in a CNDE is established when there is a direct or indirect According to this system, the passive income call option in said entity. obtained through subsidiaries incorporated in other jurisdictions must be included in the For the application of the system, an exhaustive taxable income of individuals and companies list of concepts that qualify as passive income domiciled in Peru, even when the effective (e.g., dividends, interest, royalties, capital gains distribution of the dividends associated with such deriving from the disposal of real property and passive income has not occurred. marketable/negotiable securities, etc.) and a list of excluded concepts have been drawn up. The Law provides the following requisites that foreign corporations must meet in order to be It has also been established that if the income considered a CNDE: qualifying as passive is equal to or greater than 80% of the total income of the CNDE, the total • It has a legal status apart from that of its income thereof shall be considered passive partners, associates, shareholders or, in income. general, the people who integrate it. • It is incorporated, established, domiciled in or The passive income above shall be attributed to is a resident of (i) a tax haven; or (ii) a country its owners domiciled in Peru who, as of the close or territory where its passive income is not of the fiscal year, have a direct or indirect share subject to income tax or such tax is at least 75% in over 50% of the results of the controlled entity. less than the income tax that would have been levied in Peru. 5 Taxes 160
Reduction in Capital Stock Corporate Reorganization System
Starting on June 30, 2012, the reduction of With regard to income tax applicable to capital stock for up to the amount of profits, transfer of assets as a result of a corporate surplus from revaluation, adjustments due to reorganization, there are three systems from restatement, freely-available premiums and/or which the taxpayer may choose: reserves shall be considered a distribution of dividends if: • Voluntary revaluation with tax effects: The difference between the revaluated value and • The amount of the profits, revaluation the historical cost is subject to income tax. The surplus, adjustments due to restatement, or tax basis of the assets transferred shall be the freely-available premiums and/or reserves revaluated value. (i) exist at the time the resolution is adopted Starting on January 1, 2013, the difference for the reduction of the capital stock; (ii) subject to income tax may not be offset with have been previously capitalized, unless the tax loss of the taxpayer performing the the reduction in capital stock is allocated to revaluation. cover losses, in accordance with the Business Corporations Act (LGS). • Voluntary revaluation without tax effects: The difference between the revaluated value • If, after the resolution adopted for the and the historical cost shall not be subject to reduction, the profits, revaluation surplus, income tax provided that the earnings are not adjustments due to restatement, or freely- distributed. In this case, the revaluated value of available premiums and/or reserves are: the assets transferred is not a tax basis. i) Distributed: Such distribution shall not be Starting on January 1, 2013, it is presumed, considered as dividends or any other form without permitting evidence to the contrary, of profit sharing. that earnings have been distributed: ii) Capitalized: The subsequent reduction i) In the case of a spin-off, if the newly-issued corresponding to the amount of the shares are transferred or cancelled by a capitalization in question shall not be subsequent reorganization, provided that considered dividends or any other kind of the shares represent over 50% of the capital profit sharing. stock or voting rights and the transfer or cancellation occurs before the close of the fiscal year following that in which the spin-off entered into force. ii) When the distribution of dividends is agreed to within the four fiscal years following the fiscal year in which the reorganization is performed. 5 Taxes 161
• Transfer at cost value: The assets transferred ii) In any 12-month period, the transferor and shall have the same tax basis for the acquirer its related parties dispose by one or more as they would have had for the transferor. simultaneous or successive operations of shares or ownership interests that represent Starting on January 1, 2013, under certain 10% or more of the capital stock of the non- circumstances, it shall be assumed, without domiciled legal entity. allowing evidence to the contrary, that capital gains exist (difference between the Likewise, regulations have been established for market value and the tax basis of the assets specific cases involving the indirect disposal transferred), in the case of spin-off or corporate of shares, such as: i) the presumption of reorganization, when the newly-issued shares indirect disposal via dilution of shareholders or assets are transferred or cancelled due to of companies may not be offset with profits a subsequent reorganization, provided that of the same kind; ii) when the total amount the shares represent over 50% of the capital of the shares or ownership interests in legal stock or voting rights and the transfer or entities domiciled in the country is equal to cancellation occurs before the close of the fiscal or greater than forty thousand (40,000) Tax year following that in which the spin-off or Units (UITs) (PEN172 million or approximately reorganization entered into force. USD48 million); iii) if the shares or ownership interests being disposed of, or the new shares or Indirect Stock Transfer ownership interests issued as a result of a capital stock increase, correspond to a legal person who Starting on February 16, 2011, the Income Tax resides in a non-cooperative jurisdiction or tax Act considers capital gains obtained from the haven, among other cases. indirect transfer of shares or ownership interests of capital stock in legal entities domiciled in Peru The Regulations contain specific rules for to be Peruvian-source income subject to tax. establishing the market value of the shares or ownership interests in order to determine In this regard, the indirect transfer of shares whether this is considered an indirect disposal shall be considered to have taken place when of shares. For such purpose, the trading price shares or ownership interests in the capital stock method, discounted cash flow method, and the of a company not domiciled in the country which shareholder value augmented method have been is in turn the owner—whether directly or through taken into account. another company or companies—of shares or ownership interests in the capital stock of legal Under certain circumstances, the Peruvian issuer entities domiciled in the country are disposed of, shall be held jointly and severally liable, unless provided that: the non-domiciled seller has established a branch in the country. i) In any of the 12 months preceding the disposal, the market value of said shares or ownership interests is equivalent to 50% or more of the market value of the non-domiciled corporation. 5 Taxes 162
Non-cooperative countries or territories or Tax Credit due to Taxes Paid Abroad tax heavens Taxes effectively paid abroad may be offset Companies domiciled in the country cannot against Peruvian income tax, even if there is no deduct, for effects of determining their income double taxation treaty, provided that the amount tax, the expenses derived from operations resulting from the application of the average performed with individuals or entities residing taxpayer rate for income obtained abroad is not in countries or territories with little or no exceeded. taxation, nor shall they have the right to offset losses generated by these operations with The credit not applied in a given fiscal year foreign-source income, except in the case of cannot be offset during subsequent or prior fiscal operations involving (i) loans; (ii) insurance and years, nor may it be refunded. reinsurance; (iii) assignment for use of vessels or aircraft; (iv) transport performed from Peru Starting on January 1, 2019, under certain abroad and from abroad to Peru; (v) fee for conditions, credits may be deducted not only transit through the Panama Canal. in the case of income tax paid abroad, as levied on the distribution of dividends (direct credit), Likewise, those operations performed from, but also the tax levied on the business activities to or through non-cooperative countries or of said subsidiary (first-tier indirect credit) and territories or tax heavens shall comply with even that levied on the business activities of the transfer pricing rules. latter's subsidiaries (second-tier indirect credit).
Finally, derivative financial instruments entered The indirect credit may only be claimed if certain into with taxpayers domiciled in tax havens shall requirements are met, such as an ownership be considered speculative, in which case losses interest of at least 10% in the respective may only be offset with profits of the same kind. subsidiary over the course of at least twelve (12) months. Additionally, the second-tier Certain measures have also been taken to subsidiary must: (i) be a resident of or domiciled counteract the use of “preferential tax systems” in a country with which Peru has entered into which grants the same tax treatment to non- an information exchange agreement; or (ii) be a cooperative countries or territories or tax resident of or domiciled in the same country as heavens. the corporation that distributes dividends to the Peruvian corporation. 5 Taxes 163
The application of the indirect credit shall B. TEMPORARY NET ASSETS TAX (ITAN) not include the income tax paid abroad by corporations residing in non-cooperative The Temporary Net Assets Tax (ITAN) is countries or territories or tax heavens, or rent, equivalent to 0.4% of the total value of net income, or earnings subject to a preferential assets in excess of PEN1 million determined income system. as at December 31 of the previous year. Companies in the pre-operational stage are Any direct or indirect credits not applied during excluded. The ITAN payments can be used a given fiscal year may not be offset against as an income tax credit. A refund may be subsequent or previous fiscal years, nor shall requested for any balance not used in the they qualify for refunds. current year.
Other Specific Anti-Evasion Rules To avoid double taxation issues, subsidiaries and branches of foreign corporations may elect • Non-deductible capital losses for the disposal of to credit against the ITAN the credit for the securities: income tax paid in Peru. As such, taxpayers might be able to claim the income tax paid in Capital losses originated from the disposal of Peru as foreign tax credit in their country of securities shall not be deductible when: origin, and not the ITAN. a) At the time of the disposal or thereafter, within a term of no more than 30 calendar days, the acquisition of marketable/ C. TAX ON FINANCIAL TRANSACTIONS (ITF) negotiable securities of the same type as AND MEANS OF PAYMENT those disposed of or call options thereon occurs. A 0.005% tax is generally levied on deposits and withdrawals in Peruvian bank accounts. b) Prior to the disposal, within a term of no more than 30 calendar days, the acquisition Any payment in excess of PEN3,500 or of marketable/negotiable securities of USD1,000 must be made using the so-called the same type as those disposed or of call “Means of Payment,” which include bank options thereon occurs. deposits, drafts, wire transfers, transfer of funds, payment orders, credit and debit cards The tax basis of the marketable/negotiable issued in Peru, and “non-negotiable checks.” securities whose acquisition would have given rise to the non-deductibility of the capital losses Not using these methods of payment would in question shall be increased by the amount of mean that the corresponding cost or expense the non-deductible capital loss. of the payment cannot be recognized for income tax purposes. In addition, any Value Added Tax (VAT) in said transactions cannot be used as tax credit. 5 Taxes 164
A. VALUE ADDED TAX (VAT) Finally, the new special system authorizing micro- enterprises engaged in production activities to Taxable Base and Application enjoy the refund of the tax credit paid on imports and/or local purchases of new capital goods, INDIRECT Value Added Tax (VAT) is levied on the sale of not exhausted within the three consecutive 2 goods, the delivery and use of services and the months following the date of registration of the TAXES import of goods in Peru with an 18% tax rate respective voucher in the Purchase Journal. (includes 2% for Municipal Promotion Tax). Final VAT Refund The Value Added Tax (VAT) Act uses the debit/ credit system, under which the VAT paid on sales A tax benefit consisting of the refund of all Value is offset against the VAT paid on purchases. Any Added Taxes (VAT) and Municipal Promotion VAT that is not used as credit in a particular Taxes transferred or paid for having acquired month may be applied in the following months certain goods and services directly tied to until it is used up. This credit is not subject to exploration activities during the exploration expiration or the running of statutes. stage. Final VAT refunds apply to: (i) individuals and legal entities who are the holders of mining Corporate reorganizations are not subject to concessions; and (ii) investors who have entered this tax. into license agreements or service contracts according to the Organic Act on Hydrocarbons. Early VAT Recovery System In both cases, the beneficiary must be in the Individuals or legal entities making investments exploration stage. In the case of holders of in any sector of the economic activity that mining concessions, an exploration investment generate a third income tax bracket and agreement involving a minimum investment of developing projects currently in a 2-year or USD500,000 must also be adopted. longer pre-operational stage may resort to the Early VAT Recovery System and request the The tax refund is not conditional upon the early recovery of the VAT transferred or paid beneficiary's commencement of production for the acquisition of new capital goods, new operations. This regimen is in force until intermediate goods, as well as construction December 31, 2022. services and agreements, directly used in the execution of the corresponding project.
For such purpose, the company must sign an investment agreement with the Private Investment Promotion Agency (ProInversión) and the sector corresponding to the project to be carried out, which shall issue a Ministerial Resolution qualifying the applicant as a beneficiary of the system. The investment to be made under the agreement may not be less than USD5 million, except for investments to be made in the agricultural sector, which is exempt from this requirement. 5 Taxes 165
Export of Goods Export of Services
The export of goods is not subject to the The export of services is not subject to the payment of VAT. payment of VAT.
The Value Added Tax Act defines the export of Operations considered to be export of goods as the sale of real property performed services include those that meet the following by a taxpayer domiciled in the country to a requirements: (i) they are provided for valuable non-domiciled party, regardless of whether the consideration, (ii) the exporter is domiciled, transfer occurs abroad or in Peru, provided that (iii) the user is non-domiciled, (iv) the use or said goods are subject to a customs process for exploitation of the services by the non-domiciled definitive export. party occurs abroad; and (v) the exporter is previously registered in the Exporters' Registry If the transfer of ownership occurs in the kept by the SUNAT. country prior to loading, the classification as export of goods is conditional upon the goods being shipped within a term of no more than B. SELECTIVE CONSUMPTION OR LUXURY 60 calendar days after the date of issue of the TAX (ISC) respective payment voucher. This tax applies to the consumption of specific When the sale involves documents issued by a goods, such as fuels, cigarettes, beers, liquors, bonded warehouse referred to in the General soft drinks, gambles and bets, etc. It is applied Customs Act or a normal deposit warehouse under three systems: (i) specific, which involves regulated by the Superintendency of Banking, a fixed amount in Soles per unit of measurement; Insurance and Private Pension Fund Management (ii) at value, based on a percentage of the sale Companies (SBS) that guarantee the purchaser's price; and (iii) sale price, based on a percentage right to dispose of said goods, the classification of the suggested retail price. shall be conditional upon the shipment being performed within a term of no more than 240 Starting on January 1, 2019, casino games and calendar days after the date on which the slot machines are also subject to ISC. warehouse issues the document.
If the established terms expire without the goods having been shipped, it shall be understood that the operation has been performed in national territory, and shall be levied with or exempted from VAT, as applicable. 5 Taxes 166
A. PROPERTY TAX C. VEHICLE PROPERTY TAX
Property Tax is an annual municipal tax that The Vehicle Property Tax is an annual tax is levied over the value of urban or rustic levied on the ownership of automobiles, pickup MUNICIPAL premises. For such purpose, premises are trucks, and station wagons manufactured in 3 considered to include land, buildings, and fixed the country or imported that are no more than TAXES and permanent facilities. three years old. The three years are calculated from the first filing of the automobile with the The tax rate is a progressive cumulative Vehicle Property Registry. scale varying between 0.2%, 0.6% and 1.0%, depending on the value of the property. This tax The taxable base is determined by the original is charged to the individual or legal entity that, value of acquisition, importation, or entry into as at January 1 of every year, is the owner of ownership. The applicable tax rate is 1%. the levied property.
B. PROPERTY TRANSFER TAX
Property Transfer Tax is levied on the transfer of urban or rural property, with or without valuable consideration, in any form or manner, including sales in which the ownership rights are not transferred to the buyer until the total price is paid.
The taxable base is the sale price of the property. The tax rate is 3%, to be paid by the buyer. The first 10 Tax Units (UITs) (PEN41,500 or USD12,691) are tax-free. 5 Taxes 167
A. CUSTOMS TAXES The customs taxes and duties applied are summarized as follows: Imported goods are subject to import tariffs with 2 currently ad valorem rates of 0%, 6% and 11% . Tax Rate Taxable Base CUSTOMS Customs Likewise, the Value Added Tax (VAT) of 18% is 0%, 6% y 11% CIF Value (d) 4 Tariffs (a) SYSTEM applied to imported goods. Additionally, and Value Added CIF + Customs depending on the type of goods and origin (b) (c) 18% thereof, imports may be taxed with the Selective Tax (VAT) Duties Consumption or Luxury Tax (ISC), Antidumping (a) The customs tariff rates depend on the type of goods being Duties, Compensation Duties, or others. imported. (b) The Value Added Tax (VAT) can be used as tax credit by the There are also specific duties to be applied importer. (c) Certain goods are additionally subject to the Selective as additional variable duties on imported Consumption or Luxury Tax (ISC). agricultural and livestock products such as hard (d) This value shall be determined according to the WTO yellow corn, rice, milk and sugar. Customs Valuation Agreement, as well as the standards of the Andean Community and national law. Some imported goods can also be charged with anti-dumping or compensation duties. The The import of goods is subject to the Prepaid former is applied to some imported goods when VAT System, wherein the tax is determined by the price discrimination could harm or threaten applying a percentage to the CIF customs value to harm a branch of national production. plus all taxes levied on the import and other Compensation duties are applied to imported surcharges, where applicable. The applicable goods that are subsidized in their country of tax rate is 3.5%, 5%, or 10%, depending on origin and can harm or threaten to harm national the situation of the importer and/or the goods production branch via the importation thereof, to be cleared through customs. Like VAT, the according to the INDECOPI assessment. amount paid may be used by the importer as a tax credit. However, there are certain cases in which the prepaid VAT does not need to be paid; for example, when the import is performed by VAT withholding agents, or in the case of certain goods excluded from this system.
2 In addition, a tariff rate of 4% is charged in the case of Express Shipments (goods with a FOB value of USD200 or more, up to a maximum amount of USD2,000 per shipment). 5 Taxes 168
When importing consumer goods worth more • National Superintendency of Customs and than USD2,000, the services of a customs Tax Administration (SUNAT) through the agent authorized by Peruvian Customs will National Intendancy of Chemical Supplies and be necessary, to undertake the documentary Supervised Goods for controlled chemical procedures for the imports. It is worth noting inputs and audited goods given its probability to that the importer will be required to have the be used in illegal mining and in the preparation necessary documents that support the entry of of illegal drugs, among others. goods, such as the commercial invoice, shipping • Ministry of Health (MINSA), through the documents, etc. Medicines, Supplies and Drug Administration (DIGEMID), with respect to medicines; and In addition to the formalities of customs through the General Bureau of Environmental clearance procedures, there are local Health (DIGESA) with regard to food and regulations that establish additional beverages, etc. requirements for the entry of goods that are considered restricted or prohibited. Further • Ministry of Energy and Mines (MINEM) in details are provided herein below. the case of goods (products, machinery and equipment) that use radioactive sources. • Ministry of Internal Affairs (MININTER), through B. RESTRICTED OR PROHIBITED GOODS the National Superintendency for the Oversight of Security Services, Weapons, Munitions, Some goods that are imported into the country and Explosives for Civilian Use (SUCAMEC) for may be considered by legal mandate to be goods such as fire arms, explosives, etc. restricted or prohibited, for reasons of national security or public health, among other reasons. • Ministry of Agriculture (MINAGRI), through the National Agricultural Sanitation Service, Restricted goods are those that require special such as the institution in charge of protecting authorizations, licenses, permits, etc., from the agricultural health, etc. pertinent institutions, depending on the goods • Ministry of Transportation and Communications to be imported, in order to be imported into the (MTC) for goods using radio-electric country. These goods must have the required transmitters in general and/or communications documentation at the time of importation, prior equipment. compliance with the requirements established by the control units of the competent sector. • Ministry of Foreign Affairs (MRE) for texts and/ or publications that include geographical, Some of the entities and types of restricted cartographical and historical material. goods are as follows: Furthermore, the prohibited goods are not allowed to enter or leave the country. 5 Taxes 169
C. ANTI-DUMPING MEASURES AND D. TRADEMARKS AND PATENTS COMPENSATION DUTIES For purposes of protecting copyrights and the When an import is performed, anti-dumping like, as well as trademarks, country border and/or compensation duties may be applied measures have been established so that for the customs clearance of certain goods a request may be initiated ex parte by the in order to prevent or to correct distortions interested party, or ex officio, through the in the market due to dumping or subsidies, Customs Administration. as set forth by the Commission for Control of Dumping and Subsidies (CFD) of the National This mechanism permits companies that own Institute for the Defense of Free Competition a protected right to register with the Customs and the Protection of Intellectual Property Authority in order to request that an importation (INDECOPI). process be suspended (authorization for removal from bonded warehouses) in the case of goods Likewise, it is possible that during or after that are presumed to bear fake or confusingly customs clearance, INDECOPI may bring similar trademarks, or pirated goods that violate proceedings to establish anti-dumping or copyrights. Such requests are filed so that compensation duties, in those cases in which INDECOPI may conduct an inspection of the the declared prices may cause a threat or harm goods to be imported into the country. to a branch of national production.
It should be noted that the measures E. CUSTOMS SYSTEMS established by INDECOPI Commission for Control of Dumping and Subsidies (CFD) may The following are some of the customs systems be temporary or permanent. established in the General Customs Act:
Currently, anti-dumping duties are charged on Drawback biodiesel originating from Argentina, stainless steel cutlery and shoes from China, as well The simplified system of returning customs as fabrics from India, etc. Likewise, some duties, or “drawback,” allows producer-exporters final compensation duties are charged on to recover all or part of the customs duties paid biodiesel imports originating from Argentina on importing raw materials, inputs, intermediate and ethanol originating from the United States, goods, and parts and pieces incorporated or among others. used in the production of goods to be exported, provided the CIF import value is not more than 50% of the FOB value of the exported product, and all the requisites established in order to be eligible for this benefit are met. The drawback rate applicable is equivalent to 3% of the FOB value of the exported product. 5 Taxes 170
Duty-Free Replacement of Goods F. FREE TRADE ZONES
This customs system allows for importation • Tacna Free Trade Zone with automatic exemption from customs duties and other taxes levied on imports, goods The Tacna Free Trade Zone was created in equivalent to those which—after having been 2002 in order to promote investment in the cleared through customs—have been processed, south of the country through the incorporation elaborated, or materially incorporated into of companies engaged in a series of industrial products that are permanently exported. The activities, agribusiness, in-bond processing and beneficiaries of this system are those individuals assembly, and storage, distribution, unpacking, or legal entities that have exported—directly and packaging services, etc. A tax exemption or through third parties—products which use system was granted, which includes Income Tax, imported goods. Value Added Tax (VAT), Selective Consumption or Luxury Tax (ISC) Municipal Promotion Tax, as Temporary Admission for Re-Exportation in the well as any other tax, whether existing or to be Same State created, provided the activities are developed within that Zone. This customs system allows for the reception of certain goods in national territory, with Products shipped from abroad that enter the the suspension of customs duties and other Zone are not subject to import duties, since taxes levied on the importation thereof (for a the Tacna Free Trade Zone has been granted maximum period of 18 months) duly guaranteed, the status of a special customs treatment area. destined for a specific purpose in a specific In the case of goods transferred to the Tacna place and which will be re-exported within the Commercial Area, only a special tariff is paid. established term without having undergone any However, if those goods are destined for the modification whatsoever, with the exception of rest of the country, then they are subject to the depreciation as a consequence of normal payment of the duties charged on imported wear and tear. goods.
Bonded Warehouses The benefits system of tax exemptions is in effect until 2032. This system allows for goods entering national territory to be stored in a bonded warehouse for such purpose, for a given period (maximum term of 12 months) under the control of a customs agency, without paying customs duties and other taxes applicable to import for consumption, provided that no specific customs system has been requested for them and they are not in a situation of abandonment. 5 Taxes 171
• Puno Special Economic Zone G. OTHER SPECIAL TREATMENT ZONES
Like the Tacna Free Trade Zone, the Puno Special Development Zones (ZED) (previously Special Economic Zone is an area which enjoys known as CETICOS) the status of falling outside customs territory, where a special tax system is applied that not In addition to the special customs areas only exempts goods entering the area from mentioned above, there are also Special import duties, but also provides an exemption Development Zones (ZED) in Ilo, Matarani, Paita, to Income Tax, the Value Added Tax (VAT), Tumbes, and Loreto. Selective Consumption or Luxury Tax (ISC), Municipal Promotion Tax, as well as any other ZEDs are limited geographical areas that are federal, regional or municipal tax currently in considered primary customs zones subject to force or to be created, including those that special treatment, where industrial, maquila, require express exemption, provided that users logistics (merchandise storage, transportation, carry out authorized activities such as industry, distribution, and sale, etc.), repair or agribusiness, in-bond processing and assembly, refurbishment, telecommunications, information and storage, distribution, unpacking, packaging technology, and scientific and technological services, etc., within the Zone. research and development activities may be performed. The exemptions are valid through 2027, with the exception of the Income Tax, which Therefore, the entry of goods to these zones is concludes on December 31, 2028. At present, except from import taxes; however, the entry the zone is not yet operative. of goods from ZEDs to the rest of the national territory is subject to the payment of customs duties and other import taxes.
With regard to all other duties and taxes, the development of activities in the country's ZEDs is exempt until December 31, 2042 from Income Tax, Value Added Tax, Selective Consumption or Luxury Tax (ISC), Municipal Promotion Tax, as well as all taxes in force or created in the future— including those that require express exemption by law—with the exception of contributions to ESSALUD and rates. Likewise, transfers of goods and provisions of services between users established in ZEDs are exempt from the Income Tax, Value Added Tax (VAT), Selective Consumption or Luxury Tax (ISC) and any other tax in force or to be created, including those that require express exemption. 5 Taxes 172
Finally, in the case of the Loreto ZED, The Private Investment Promotion Agency it is important to note that the term for (ProInversión), as representative of the Peruvian incorporating companies in that Zone, as well Government, can enter into legal stability as their exemptions, is fifty (50) years, as from agreements guaranteeing the investors and May 22, 1998. At present, the Loreto and LEGAL companies receiving these investments, as Tumbes ZEDs are not yet operative. 5 applicable. For such purpose, it is necessary to STABILITY make capital contributions to a company currently Amending Protocol to the Peruvian – AGREEMENTS established or to be incorporated in Peru for an Colombian Customs Cooperation Agreement amount of no less than USD10 million in the mining of 1938 and hydrocarbons sector, and USD5 million in any other economic sector. This investment may be This Protocol grants preferential duties for the made within a period of no more than two years. import of certain goods detailed in the Common The term of the agreement is ten years, except for External Duty Schedule that forms part of the those investors who have entered into a concession Protocol. agreement as established in Executive Order (Decreto Supremo) 059-96-PCM. In this case, This preferential treatment applies solely to stability governs for the term of the concession. those goods imported to Loreto, San Martín, and Ucayali.
Act for the Promotion of Investment in the Peruvian Amazon – Law 27037
This Act enables importers to bring certain goods into Peru for consumption in the Amazon region, corresponding to Chapters 84, 85, and 87 of the Customs Tariff Schedule, exempt from value added tax payment, through December 31, 2029 (with the exception of the department of Loreto, which will enjoy this benefit until December 31, 2028).
For purposes of this benefit, among other aspects, the Amazon region is considered to consist of the departments of Amazonas, Loreto, Madre de Dios and Ucayali, as well as certain provinces of the Departments of Ayacucho, Cajamarca, Cuzco, Huanuco, Junin, Pasco, Puno, Huancavelica, La Libertad, and Piura. 5 Taxes 173
Law 29789 – Special Mining Tax (IEM) / Executive Order (Decreto Supremo) 181-2011-EF- IEM Regulations on the IEM
MINING The Special Mining Tax (IEM) in force since October The IEM is determined and paid quarterly based 6 1, 2011, is levied on the operating profits of on a progressive cumulative scale of operating LAW holders of mining concessions and assigns that margins, with marginal rates ranging from 2% to undertake the exploitation of mineral resources, 8.4%. Technically the IEM is based on the sum of applicable to the sale of metallic mineral resources each increase in the operating margin, multiplied by as well as resources for personal use or unjustified the rate of the progressive tax as per the following withdrawals of such assets. table and definitions:
Special Mining Tax (IEM) Donde: Scale of Operating Margin Marginal Scale No. • Operating Profit: Income generated through the sale Lower Limit Upper Limit Rate of mineral resources for each quarter, less: (i) the cost 1 0% 10% 2.0% of goods sold; and (ii) operating expenses, including cost of sales and administrative expenses. Exploration 2 10% 15% 2.4% expenses shall be distributed proportionally over the 3 15% 20% 2.8% useful life of the mine. Costs and expenses incurred 4 20% 25% 3.2% in on-site consumption or unjustified withdrawals of 5 25% 30% 3.6% mineral resources are not deductible, nor are interest charges, regardless of whether they have been 6 30% 35% 4.0% capitalized as part of the cost of sales or treated as 7 35% 40% 4.4% operating expenses. 8 40% 45% 4.8% • Sales Revenue: Income generated by sales of metallic 9 45% 50% 5.2% mineral resources, with certain adjustments such as 10 50% 55% 5.6% adjustments due to final determination of amounts 11 55% 60% 6.0% due, discounts, return of goods, and other concepts 12 60% 65% 6.4% of a similar nature that are common practice.
13 65% 70% 6.8% The amount effectively paid for IEM is considered a 14 70% 75% 7.2% deductible expense for effects of determining income 15 75% 80% 7.6% tax for the fiscal year in which it was paid. 16 80% 85% 8.0% Furthermore, those in the mining industry must file 17 Over 85% 8.4% a statement and pay the IEM every quarter, within 12 business days of the second month after it was Operating Margin = Operating Profit x 100 generated, under the terms and conditions established Sales Revenue by the National Superintendency of Customs and Tax Administration (SUNAT). 5 Taxes 174
Law 29790 – Special Mining Encumbrance (GEM) / Law 29788 – Mining Royalties Act / Executive Executive Order (Decreto Supremo) 173-2011-EF Order (Decreto Supremo) 180-2022-EF – Regulations on the GEM The mining royalty is applicable to holders of mining The Special Mining Encumbrance (GEM), in force concessions and concessionaires that undertake as of October 1, 2011, is a voluntary payment, the exploitation of metallic and non-metallic mineral applicable to holders of mining concessions and resources. concessionaires engaged in the exploitation of metallic mineral resources with investment Starting on October 1, 2011, Mining Royalties shall projects subject to Contracts for Guarantees and be paid quarterly, and are determined by applying Promotional Measures for Investment established a cumulative progressive rate of 1% to 12% to in the General Mining Act, which cannot be affected the operating profit, depending on the operating by changes in the legislation regarding the IEM and margin, provided the amount payable is not less mining royalties. For such purpose, an agreement is than 1% of the income generated from the sales entered into for the payment of the GEM. performed during the calendar quarter. If this latter condition is not met, the minimum amount payable Like the IEM and the Mining Royalties, the GEM for royalties shall be determined based on sales is quarterly, and is established by applying a revenues. cumulative progressive rate of 4% to 13.12%, depending on the operating margin, to the quarterly Mining Royalties are deductible for the purpose of operating profit. determining income tax.
The GEM is a deductible expense for the purposes of income tax, and is determined by deducting the Law 29741 – The Supplementary Mining, amounts paid for Mining Royalties as tax credits. Metallurgy, and Steelworkers' Retirement Fund (FCJM) / Executive Order 006-2012-TR – FCJM Regulations
The Supplementary Mining, Metallurgy, and Steelworkers' Retirement Fund (FCJM), in force as from July 10, 2011, consists of (i) a contribution of 0.5% of the annual net revenues of mining, metallurgical, and steel companies, before taxes; and (ii) a contribution of 0.5% of the monthly gross salary of each mining, metallurgical, and steelworker.
The companies' contributions shall be paid to the SUNAT within the first 12 business days of the month after the Annual Income Tax Return is filed. Withholdings of workers' contributions shall be paid to the SUNAT by the deadlines established in the Tax Code for monthly obligations. 5 Taxes 175
Recently, on December 6, 2020 was published the Law No. 31097, which through its article 1 repealed Law No. 27360, Law of Promotion of Investment in the Agricultural Sector, which contemplated a AGRICULTURAL special tax regime for those companies in the sector 7 that complied with the requirements indicated by REGIME said regulations, between which was the application of the rate 15% reduced for determination purposes of Corporate Income Tax and 4.1% Income Tax for the distribution of dividends. Currently, it is being discussed in the Congress of the Republic a new regulation being that the Ministry of Economy and Finance has recommended a schedule of gradual reduction of benefits. LABOR AND EMPLOYMENT LAW 6 Labor and 177 6 Employment Law
A. PERUVIAN WORKERS B. FOR EXPATRIATES
Indefinite-term contracts are the general rule for The labor relations governing foreign citizens hiring in Peru, although fixed-term and part-time entering Peru to render services for a domiciled HIRING contracts may also be signed as an exception. company are governed by the Foreign Worker 1 The principal features of each one of these Hiring Act. These workers have the right to the SYSTEM contracts is detailed below: same benefits provided to all workers in the private business workforce, and are subject to • Indefinite-term contracts: Have no expressly the same taxes and contributions. The difference defined duration. This form of employment is that the approval of the employment contract contract grants workers all labor rights and by the Ministry of Labor and Employment benefits in force under Peruvian law, as detailed Promotion (MTPE) is required to begin providing in Section VI.2 – Current Fringe Benefits. the services, as well as obtaining the pertinent migratory status. In the case of the income tax, • Fixed-term contracts: For this form of the withholding rate shall depend on whether contract, the legislation requires proof of an they are domiciled or non-domiciled. objective cause or ground that guarantees temporary hiring (for example, the start-up of As a general rule, expatriates must not exceed a new business, specific projects or services, 20% of all personnel. Additionally, the total substitution, etc.) and the term thereof is remuneration received by foreign workers must subject to compliance with the requirements not exceed 30% of the total payroll. Exceptions provided by law. Likewise, they provide all the to these limits may be made in the case of rights and benefits granted to workers hired for professionals and specialized technical staff, or an indefinite term. for management staff for a new business activity or corporate restructuring or reorganization, etc. • Part-time contracts: These contracts govern labor relations that cover work schedules with a None of the limits on number of personnel and weekly average of less than four hours per day. salary amounts are applicable to foreign workers Part-time workers are eligible for all benefits who render services in Peru on an immigrant under the law, except for: i) indemnity for visa, who are married to Peruvian citizens, wrongful dismissal; ii) severance pay (CTS); and or who have children of Peruvian nationality, iii) vacation time of 30 days (they only have the parents or siblings, and foreign investors with right to six business days' vacation per year). a permanent investment in Peru of at least five Tax Units, or foreign workers who render All of these contracts allow for a trial period, services in the country by virtue of bilateral or during which the workers have no right to multilateral conventions entered into by Peruvian indemnity in the event of wrongful dismissal. The Government. trial period is counted from the start of the labor relationship and may have a maximum term of: i) 3 months for all workers in general; ii) 6 months for qualified workers or those in positions of trust; and iii) 12 months for management staff. For its effectiveness, the extension of the trial period must be recorded in writing. Labor and 178 6 Employment Law
Companies must follow the procedure to obtain Workers have the right to the following the approval of the MTPE, filing the employment fringe benefits, the cost of which is borne by contract in a virtual system, attaching an the employer: affidavit of compliance with the Foreign Worker Hiring Act, as well as an affidavit indicating the CURRENT Benefit Monto anual / Tasa aplicable qualifications of the expatriate. 2 Equivalent to 30 calendar days FRINGE Vacation Leave of rest, with one month of paid It is important to note that citizens of the Andean BENEFITS remuneration Community of Nations, Spanish citizens, and Two months' remuneration citizens of the Mercosur nations are subject to a Legal Bonuses per year special contracting procedure. Mandatory Two bonuses equivalent to 9% Extraordinary The migration procedure is detailed in Point 5. or 6.75% of the legal bonuses Bonus Severance Pay 9.72% monthly remunerations (CTS) per year Between 5% and 10% of income Profit Sharing before taxes PEN93 per month (10% of the Family Allowance Minimum Wage)
• Vacation Leave: The right to 30 calendar days of paid vacation per complete year of service, provided workers meet the vacation record, which is a minimum of days effectively worked as required by law. The vacation period must be taken within the calendar year following the year of services rendered and the related record. However, advances may be granted provided there is an agreement with the employer. In the event that the worker does not take vacation time when due, the employer shall pay one additional month of remuneration as vacation indemnity
• Legal Bonuses: Two bonuses per year, the first in July (Independence Day holidays) and the second in December (Christmas). Workers who leave their job before the months of July or December are entitled to receive the proportional payment of this benefit for the full months completed on the job, provided they have worked at least one full month. Labor and 179 6 Employment Law
• Mandatory Extraordinary Bonus: This is an • Family Allowance: Workers who have one or additional benefit whereby the worker receives more dependent children under the age of 18, two bonuses equivalent to 9% of the legal bonuses, or children over 18 enrolled in vocational or or 6.75% if the worker is a member of a Healthcare university education, are entitled to this benefit. Service Provider Company (EPS). The amount is equivalent to 10% of the Minimum Wage. • Severance Pay (CTS): This is a fringe benefit to cover contingencies arising from termination of • Comprehensive Annual Remuneration: With employment and promotion of the workers and workers who receive a monthly salary of at least their families. The payment is deposited in the two Tax Units, the employer can negotiate a workers' bank account in the months of May and comprehensive annual remuneration (RIA) to November, depositing said amount in the bank which all the benefits detailed above are added, account chosen by the worker. with the exception of profit sharing, to be paid as provided by law, and which may be paid directly to • Profit Sharing: Companies with more than 20 the worker in 12 monthly installments. workers that engage in activities that generate business income are required to distribute a percentage of their annual income before taxes among their workers. The percentage of the share is fixed by law, and depends on the company's principal activity, as follows:
Type of Company Percentage Fisheries, telecommunications, and 10% industrial companies Mining companies, wholesale and 8% retail businesses, and restaurants Companies engaged in other activities 5% Labor and 180 6 Employment Law
The employer shall assume the payment of the an amount of three UITs from the respective following taxes and contributions: tax basis, by virtue of expenses incurred in the leasing of real properties, interest on first-home Taxes / Contributions Applicable Rate mortgage credits (which will be deductible only until December 31, 2018), professional fees TAXES AND Public Health 9% paid to freelancers (such as doctors, dentists, 3 Insurance (EsSalud) CONTRIBUTIONS attorneys, veterinarians, etc., provided they issue Mandatory Life LEVIED ON Depends on the type of policy the respective receipts for professional fees), and Insurance social medical insurance contributions (Essalud) REMUNERATIONS Occupational Life and Depends on the type of policy for household employees. Disability Insurance 13% for the Public System or • Public Health Insurance (EsSalud): This Pension System 12.94% for the Private contribution is paid by the employer and is System (approximately) designed to finance the public health system (EsSalud) so that the system may provide • Income Tax: The employer is responsible for healthcare services to workers and financial withholding and paying income tax on earnings. assistance in case of disability, through A projection of the worker's annual earnings is the payment of subsidies. The collection of made, to which the rates established as follows this amount is undertaken by the National are applied. The approximate monthly deduction Superintendency of Customs and Tax shall be one-twelfth (1/12th) of the determined Administration (SUNAT) to which employers annual tax amount, which may be established by make this payment. The amount contributed following the procedures provided by law, in order is equivalent to 9% of the worker's monthly to establish the exact amount to be withheld. For remuneration. If the company provides health domiciled workers, an initial deduction of seven coverage to its workers using its own resources or Tax Units (UITs) is applied and further to this, the through a Healthcare Service Provider Company following rates are applied: (EPS) it may request a credit of up to 25% of the EsSalud contribution, provided it complies with the Sum of the Net Work Income and of the limits established by law. Rate Foreign Source Income Up to 5 Tax Units (UITs) 8% • Statutory Employer-Provided Life and Disability Insurance: This is a collective insurance provided More than 5 up to 20 Tax Units (UITs) 14% to workers from the first day of work. The More than 20 up to 35 Tax Units (UITs) 17% premium depends on the number of insured More than 35 up to 45 Tax Units (UITs) 20% workers, the work they carry out and, in general, More than 45 Tax Units (UITs) 30% the terms agreed to with the insurance company.
For non-domiciled workers the rate is 30% without • Pension System: The workers may join the deductions. National Pension System (SNP) or the Private Pension System (SPP) which are mutually Likewise, starting in fiscal year 2017, it is exclusive. This contribution is to be assumed fully possible—in addition to the deduction of seven by the worker, with the employer being responsible Tax Units applicable to the work income of parties solely for its collection. domiciled in Peru for tax purposes—to deduct Labor and 181 6 Employment Law
• In the case of the SPP, the contribution c) Contribution to the National Industrial consists of the amount paid to the individual Vocational Training Service (SENATI): capitalization account (10%), plus a premium for Companies engaged in industrial activities disability, survival, and burial insurance, plus the included in Category D of the Uniform commission paid to the AFP. This commission is International Industrial Classification (UIIC) are calculated based on the salary received and the under the obligation to make a contribution to balance of the pension fund. The commission the National Service for Training in Industrial and premium amounts are determined by Work (SENATI). The contribution amounts to each AFP. New affiliates to the SPP system are 0.75% of the worker's remuneration, according required to register with the AFP that won the to the conditions provided by law. most recent tender process (AFP Prima) through May 31, 2021. d) Contribution to the Administrative Committee of the Fund for the Construction of Housing • Other Contributions: Other contributions depend and Recreational Centers (CONAFOVICER): on the activity performed by the companies, This is a contribution to be assumed in full by for example: those workers who perform civil construction activities for a company engaged in a) Occupational Life and Disability Insurance: A construction. The amount of the contribution mandatory insurance to be paid by companies is equivalent to 2% of the worker's basic daily whose activities involve a high level of risk, remuneration. and which grants additional coverage for health and pensions. The contract for health e) Contribution to the National Training Service for services may be entered into with EsSalud or the Construction Industry (SENCICO): This is a with a Healthcare Service Provider Company contribution to be paid by companies engaged (EPS); while pension-related services may be in construction activities. The contribution contracted with the Government Agency for amounts to 0.2% of the total company income Pension Fund Management (ONP) or with a for labor, general expenses, technical direction, private insurance company. The rates depend profits, and any other concept billed to the on the type of activity and/or the terms client, regardless of the construction contract agreed on with the insurance company. executed.
b) Supplementary Retirement Fund for Miners: Mining, metallurgical, and iron and steel companies must contribute 0.5% of their annual net earnings before taxes to this fund, as well as withholding 0.5% of the gross monthly remuneration of each mining, metallurgical, and iron and steel worker. Labor and 182 6 Employment Law
The employment contract is terminated under the according to conditions established under national following circumstances: legislation. • In cases established for collective dismissal, • Compliance with the condition subsequent or the pursuant to Peruvian law. TERMINATION termination of the period of fixed term contracts. 4 • By agreement between the worker and the OF THE The dismissal shall be subject to the verification employer, which should be put into writing. EMPLOYMENT of an objective cause that justifies the action, • Resignation of the workers, who must provide 30 pursuant to law. If the cause is found not to exist, CONTRACT days' prior notice. the employer shall be penalized via the payment of an indemnity. • Due to permanent absolute disability or death of the worker. However, the Constitutional Court has established • Retirement of the worker. certain cases in which the workers may also request their reincorporation into their job position, as per • Justified dismissal, in which the cause must the following chart: be related to the skill or conduct of the worker,
Type of Dismissal Description Consequences When the employer does not give a legal Reincorporation / indemnity at the Unfounded dismissal cause or ground discretion of the worker When the employer falsely charges the Reincorporation / indemnity at the Fraudulent dismissal worker of committing gross negligence discretion of the worker When the measure violates the fundamental Void dismissal Reincorporation rights of the worker When the gross negligence is not proven Dismissal with reasonable during the process, although due process Indemnity charge of gross negligence was followed as required by law When the worker is subject to acts of hostility Indirect dismissal Indemnity comparable to dismissal
Indemnity shall only proceed once the trial period In both cases, indemnity is paid in fractions of 12ths has been completed (first 3 months of a contract) and 30ths per year, and is limited to 12 monthly and is limited to 12 monthly remunerations. remunerations.
In the case of workers who are hired for an Management staff or workers in positions of indefinite term, the amount to be paid is one trust who are hired as such may not request and a half months' remuneration for each year reincorporation, and are only entitled to receive an of completed service. On the other hand, in the indemnity for dismissal, unless they have previously case of workers hired on a fixed-term contract, held an ordinary position, in which case they indemnity is one and a half months' remuneration may also be entitled to reincorporation into such for each month not worked up until the termination ordinary position. of the contract. Labor and 183 6 Employment Law
Foreigners may apply for one of the visas listed below, depending on the activity they wish to undertake in Peru:
IMMIGRATION Visa Type of Visa Activities Permitted 5 Limited to tourist visits, recreation, or similar activities. Paid or lucrative Tourist Visa Temporary activities are not permitted. Allows those foreigners who do not intend to establish residence in Peru to perform business, legal, contractual specialized technical assistance, or similar activities. Granted by the Ministry of Foreign Affairs (MRE). In the case of Business Visa Temporary countries with which Peru has an agreement, this visa may be granted by the customs officer at the airport. Permits multiple entries, with a cumulative stay time of up to 183 days within a 365-day period. Temporary / This visa allows them to work in Peru on a contract previously approved by the Work Visa Resident Ministry of Labor (MTPE) They must provide proof of an investment equivalent to PEN500,000. Temporary / Foreigner individuals may only hold the position of director or manager of their Investor Visa Resident company, for which purpose they shall comply with the applicable labor and tax laws. Proof of this investment cannot consist of the transfer of shares. Foreigners may perform labor activities when they are sent by their foreign employer for a limited and definite term to engage in a specific task or duty Designated Temporary or a work that requires professional, commercial, technical, or highly-skilled Work Visa knowledge of another kind. They may also execute contracts and perform transactions. They may exercise their profession independently. Freelance Temporary / Requires the execution of a service agreement and the obtainment of a tax ID Work Visa Resident number (RUC). Provided they enter the country to take up residence, they can develop their Immigrant Resident activities on a permanent basis Those entering the country for the purpose of studying at educational Temporary / centers accredited by the State cannot receive Peruvian-source income, with Student Visa Resident the exception of that received for professional internships or work during vacations, prior authorization from the competent authority.
It should be noted that the tourist visa and business visa is the responsibility of the Ministry of Foreign Affairs (MRE), while the rest of the visas depend on the National Immigration Service.
Foreigners coming from Mercosur countries (Brazil, Argentina, Chile, Uruguay, Colombia, Bolivia, Paraguay, and Ecuador); or from countries with specific migration agreements may be subject to other immigration provisions and/or facilities. Labor and 184 6 Employment Law
The National Superintendency for Labor Audits Inspection System, in accordance with national and (SUNAFIL) is a specialized technical entity attached sector policies and plans, as well as the institutional to the Ministry of Labor and Employment Promotion policies and technical guidelines of the Ministry of (MTPE). The SUNAFIL is responsible for promoting, Labor and Employment Promotion (MTPE). SUPERVISORY supervising, and auditing the compliance with 6 labor laws and laws on occupational health and Finally, in the last few years, the National BODY safety. It designs and conducts nationwide all duties Superintendency of Customs and Tax Administration and competencies established in Law 28806—the (SUNAT) has been overseeing the correct payment General Labor Inspection Act, and acts as the of taxes levied on income, in particular, those central authority and guiding entity of the Labor related to Social Security (EsSalud).
Like many other countries, Peru has sought to 4. Efforts to raise awareness of how to contain stem the spread of Covid-19 by establishing certain the spread of the virus at the workplace. occupational health and safety obligations that 5. Group preventive measures. must be met by companies in order to engage in ADDITIONAL in-person activities. Each country is required to 6. Personal protective measures. create a Covid-19 Surveillance, Prevention, and 7 7. Employee health monitoring for COVID-19 MEASURES Control Plan, which must contain the following symptoms. DUE TO THE guidelines, in accordance with Ministerial Resolution 972-2020-MINSA: COVID-19 The plan's implementation in each company will be subsequently audited by the National PUBLIC 1. Cleaning and disinfection of workplaces. Superintendency of Labor Audits (SUNAFIL). HEALTH CRISIS 2. Evaluation of employee health before return to or The plan shall also include the health protocols reinstatement in the workplace. applicable to the sector in which the company is involved. 3. Mandatory handwashing and disinfection.
Through Law N°31087, published on This norm regulated a particular regime December 6, 2020, Law N°27360 was applicable to workers in the sector agrarian, giving repealed, that approved the Promotion it greater liquidity. By the side of the employer, the Regulations Agrarian Sector, and Emergency labor cost of contributions to EsSalud was 6% of the REPEAL OF Decree 043-2019, modifies Law 27360, total remunerations, the general being 9%. 8 to promote and improve conditions for THE AGRARIAN development of agricultural activity, as well as LABOR REGIME the norms complementary and related. ACCOUNTING STANDARDS 7 Accounting 186 7 Standards
The Peruvian Business Corporations Act (LGS) The annual financial information given by establishes that the financial statements of companies supervised by the SMV must be audited companies incorporated in Peru must follow the and include the previous year for comparative general accounting principles accepted in Peru and purposes. Quarterly reports do not need to be ACCOUNTING other applicable legal provisions. The Peruvian audited. The audit must be conducted according 1 Accounting Standards Board (CNC) has established to regulations of the International Auditing and STANDARDS that the general accounting principles are basically Assurance Board issued by the International the standards issued by the International Financial Federation of Accountants (IFAC). Reporting Standards Board (IFRSB) including the International Financial Reporting Standards (IFRS), On April 4, 2016, the Constitutional Court declared the IFRS Interpretation Committee (IFRIC), and as unconstitutional the obligation for companies not the Standing Interpretations Committee (SIC), and listed in the Public Registry of the Stock Exchange the specific provisions approved for particular to submit audited financial statements. Such businesses (banks, insurance companies, etc.). obligation was in force as from June 2011. Likewise, on a supplementary basis, the U.S. Generally Accepted Accounting Principles (GAAPs) are applied.
The Peruvian Accounting Standards Board (CNC) is responsible for issuing the General Chart of Accounts for companies and methodologies that apply to both private business and government entities.
The CNC adheres to the standards approved by the International Financial Reporting Standards Board (IFRSB), which are explicitly approved by the CNC and published in “El Peruano” Official Gazette, indicating their date of approval, which may differ from the internationally approved date.
Companies that issue debt or shares in the capital market are subject to regulation by the Peruvian Securities and Exchange Superintendency (SMV). Companies supervised by this institution must issue their financial statements in accordance with the International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB). INTELLECTUAL PROPERTY REGULATIONS 8 Intellectual Property 188 8 Regulations
According to the World Intellectual Property In Peru, the National Institute for the Defense Organization (WIPO) intellectual property is of Free Competition and the Protection of divided into two major categories: copyright and Intellectual Property (INDECOPI) is the public industrial property. The first protects works of entity responsible for promoting and regulating SUPERVISORY human ingenuity, such as literary, audiovisual, and the exercise of these rights. 1 artistic works, software, artistic interpretations, BODY etc. Industrial property, on the other hand, grants exclusive rights over an invention, a new technology, or distinctive trademarks, such as brands, invention patents, or industrial designs.
Regulations on industrial property are contained in different local and international bodies of law, most notably:
(i) The Berne Convention for the Protection of Literary and Artistic Works, to which Peru has been a signatory since 1988.
(ii) The Paris Convention for the Protection of Industrial Property, to which Peru is a party.
(iii) Decision 486 of the Andean Community Commission, which establishes the Common Industrial Property System.
(iv) Legislative Order (Decreto Legislativo) 822—the Copyright Act.
(v) Legislative Order (Decreto Legislativo) 1075, which approves supplementary provisions to Decision 486 of the Andean Community Commission, which establishes the Common Industrial Property System. Intellectual Property 189 8 Regulations
Legislation does not usually contain an exhaustive In the majority of cases, copyright law stipulates list of works protected by copyright. Generally that the rights holder enjoys the proprietary right speaking, however, works typically protected by to authorize or prevent given uses of the work, or, copyright around the world include the following: in some cases, to receive a remuneration for the COPYRIGHT use of the work (for example, through copyright 2 • Literary works such as novels, poems, stage collectives). The owners of the proprietary rights performances, reference works, journalistic over a work can prohibit or authorize: articles • Software and databases • The reproduction of their work in various forms, such as print publication or sound recording • Movies, musical compositions, and choreographies • The public interpretation or performance, e.g., a • Works of art such as paintings, drawings, dramatic or musical work photographs, and sculptures • The recording of the work, e.g., in the form of • Architecture; and compact discs or DVD • Advertisements, maps, and technical drawings. • The broadcasting of the work over radio, cable, or satellite Copyright protection covers only expressions, and • The translation of the work into other languages; not the ideas, procedures, operating methods, or and mathematical concepts themselves. Copyright may or may not cover elements such as titles, slogans, • The adaptation of the work, as in the case of a or logos, depending on whether the authorship of novel adapted to a screenplay. the work is sufficient.
Copyright covers two types of rights:
• Proprietary rights, which allow the owners of the rights to obtain financial compensation for the use of their works by third persons; and • Moral rights, which protect the author's non- pecuniary rights. Intellectual Property 190 8 Regulations
According to Peruvian law, the owners of industrial market agent. This sign allows consumers to property rights are not obligated to register them distinguish between different competitors, with the National Institute for the Defense of Free since it represents a market agent, the quality Competition and the Protection of Intellectual of a good or service, and its commercial value. INDUSTRIAL Property (INDECOPI). Said registration is essential, 3 however, in order to hold exclusive ownership of It is fundamental to keep the registered PROPERTY these rights. mark in use, given that, after three years of inactivity, any interested persons may request Such registration also grants the owners other the cancellation of the registration of said important advantages: mark and proceed to register it themselves.
(i) It provides publicity, which means that the right (ii) Commercial slogan can be enforced against third persons. Refers to the word or phrase used together (ii) It prevents others from taking advantage of with a trademark. As such, in order to be the prestige or reputation of a creation through registered, it is necessary to indicate the imitations or falsifications. trademark with which the slogan will be associated. The slogan's validity will be (iii) It makes it possible to bring civil and even conditional upon that of the distinctive mark. criminal actions to protect the right against third Similarly, the transfer of the slogan also persons. involves the transfer of the trademark. (iv) It grants INDECOPI the power to impose sanctions, final orders, and penalty payments (iii) Trade name against those who make inappropriate use of This is the sign used to identify a company, registered industrial property. economic activity, or establishment. Unlike (v) It makes it possible to sell or assign the use of the other classes of industrial property, the right in exchange for a consideration. the exclusive rights over a trade name are automatically acquired through its first use in commerce. As such, the registration of a REGISTRABLE ELEMENTS OF trade name is merely declarative in nature. INDUSTRIAL PROPERTY Nevertheless, it is an effective measure of proof with regard to its ownership. Under Peruvian law, distinctive marks, inventions, and new technologies are registrable. Below is a list • Effectivenss of registrations of the principal elements of industrial property.
Ten years, as from the date on which the • Distinctive marks registration is obtained. This term may be renewed for an identical period. (i) Trademarks or service marks A trademark is a graphic representation used to indicate that certain goods or services have been developed or provided by a given Intellectual Property 191 8 Regulations
NON-REGISTRABLE ELEMENTS PRIORITY RIGHT
It should be noted that, despite the importance El espacio territorial en donde se puede ejercer The of registering industrial property, not all human territorial space in which the industrial property creations can be registered. In Peru, know-how does right may be exclusively exercised corresponds to not constitute a registrable element, for example. the country in which it has been registered. In other This term refers to the set of business knowledge, words, market agents must register their right in whether technical, administrative, or commercial each one of the countries in which they wish to that is acquired through experience and building make use thereof, given that their registration will of skills when carrying out a business activity or only be valid in the country in which it was granted. process. As such, “knowing how” to run a company constitutes an economic value for the company that Notwithstanding the foregoing, under the provisions is not eligible for registration. This does not mean of the Paris Convention, market agents who have that this experience or particular way of making a registered (a) an invention patent; (b) a utility model good or performing a given service is not eligible patent; (c) an industrial design; or (d) a trademark for protection, only that our laws have established in any member country of said Convention may use a scope other than intellectual property for the the submission date of their application in any other protection thereof: fair competition law. country to which said international law applies.
The term for exercising the priority right in another country depends on the type of industrial property to be registered, and the statute begins to run on the submission date of the first application for registration.
(i) For invention patents and utility models: 12 months.
(ii) For industrial designs and trademarks: 6 months.
Consequently, those who intend to register their right in another country cannot be prevented from doing so based on a registration obtained during said period. Intellectual Property 192 8 Regulations
The Paris Convention, adopted in 1883, applies In 2019, 36,259 new to industrial property in the broadest sense of the registrations were granted, term, including patents, trademarks, industrial including brands of goods drawings and models, utility models, services and services, trade slogans, MEMBER marks, trade names, geographic indications, trade names, and other 4 and the prevention of unfair competition. This distinctive marks. COUNTRIES international agreement was the first major step in OF THE helping creators to protect their intellectual works in other countries. PARIS he online channel has become CONVENTION Currently, the Paris Convention has 177 contracting increasingly important in recent parties, including Peru. years. Last year, a total of 6,567 registration applications were submitted via INDECOPI “PI- To see the list of other member countries, click on Marcas” platform. the following link here.
As of the close of the year, savings of over PEN24 million had been calculated in expenses for the publication of registration applications, thanks to the current use of the Electronic Intellectual Property Gazette.
Another comparative advantage to Peru's industrial property regime has been the implementation of the "Search for Your Brand" tool, which makes it possible to perform free registration history searches.
It is important to note the increase in complaints due to violation of industrial property rights received by the agency, with a total of 1,213 as of the close of 2019.
Source: National Institute for the Defense of Free Competition and the Protection of Intellectual Property (INDECOPI) ENVIRONMENTAL AND CLIMATE CHANGE REGULATIONS 9 Environmental and 194 9 Climate Change Regulations
Peru possesses a significant natural and The General Environmental Act, passed in 2005, cultural heritage that offers a range of organizes the regulatory legal framework for development opportunities through the environmental management in Peru. It establishes sustainable exploitation of natural resources, the basic principles and regulations to guarantee integrated environmental quality management, GENERAL the effective exercise of the right to a healthy, and the implementation of economic activities 1 balanced environment that is adequate for the full based on criteria of competitiveness and regional ENVIRONMENTAL development of life, as well as compliance with the and worldwide visibility. ACT – LAW 28611 duty to contribute to an effective environmental management and protect the environment, with The Ministry of the Environment (MINAM) is the a view to improving the public's quality of life and national environmental authority in charge of achieving the country's sustainable development. defining prioritized objectives, guidelines, the main content, and mandatory national standards. • Environmental Quality Standards (EQSs): These indicators measure the concentration of elements, In Peru, the regulatory framework on the substances, or the like, in the air, water, or soil. environment establishes limits on those Their purpose is to establish targets representing elements that pose a certain degree of danger the threshold above which a significant impact to humans and the environment. The purpose may be caused to the environment and human of this framework is to protect or remediate the health. environment; combat the effects of air, water, and soil pollution; ensure the rational use of resources; • Maximum Permissible Limits (MPLs): Established and urban, industrial, and technological growth in for sectors such as oil and gas, fisheries, cement, harmony with the environment. metallurgical mining, and vehicle transportation. MPLs measure the concentration or degree of elements, substances, or physical, chemical, and biological parameters characterizing an effluent or emission, which, if exceeded, cause or may cause harm to the human and environmental health and wellbeing. Compliance with these limits is legal binding, under the mandate of the MINAM and the bodies that form part of the National Environmental Management System. The supervision and sanctioning criteria shall be established by said Ministry. Environmental and 195 9 Climate Change Regulations
COMPANIES AND THE ENVIRONMENT All investment projects must draft an environmental certification instrument prior to According to the General Environmental Act, their implementation, anticipating any significant organizations are responsible for emissions, negative environmental impacts that may be effluents, dumping, and any other negative ENVIRONMENTAL caused. This is equivalent to the project's roadmap, impacts that may be caused to the environment, 2 which contains the owner's requirements and human health, and natural resources as a result CERTIFICATION obligations, as well as the activities to be carried of their activities. This responsibility includes out to remediate any negative impacts. environmental risks and damages caused by action or omission. All individuals or legal entities, whether public- or private-law, Peruvian or foreign, who seek to The owner of the operations must adopt develop an investment project in Peru that may prioritized measures to prevent environmental possibly cause significant negative environmental risks and damages at the potential source impacts must obtain environmental certification thereof, as well as all environmental conservation from the corresponding authorities. and protection measures applicable in each one of its operations. The performance of projects or service and trade activities may not be initiated, and no national, Studies for prefeasibility, feasibility, and sectoral, regional, or local authority may approve, definitive investment projects under the authorize, permit, grant, or enable them if they do responsibility of public or private entities whose not previously obtain environmental certification. implementation may have an impact on the environment shall include the necessary costs to The National Environmental Certification Service preserve the environment at the location where for Sustainable Investments (SENACE) conducts the project will be performed, as well as any the environmental certificate procedure for other locations that may be affected thereby. investment projects.
The government requires the owners of operations to adopt environmental management systems that are suitable for the nature and size of their operations, in order to promote the continuous improvement of their environmental performance levels. Environmental and 196 9 Climate Change Regulations
PROJECT CATEGORIZATION BY NATIONAL COMPETITIVENESS AND ENVIRONMENTAL RISK PRODUCTIVITY POLICY
All actions included in the list of investment In 2019, within the framework of the National projects subject to the SEIA for which Competitiveness and Productivity Policy—which environmental certification is being sought shall seeks to foster wellbeing for all Peruvians be classified into one of the following categories: on the basis of sustainable economic growth with a territorial approach—the National • Category I: Environmental Impact Statement Competitiveness and Productivity Plan and the - Includes those projects whose performance National Infrastructure Plan for Competitiveness does not give rise to significant negative were approved. environmental impacts. These plans include measures to promote • Category II: Semi-Detailed Environmental environmental sustainability in the operation of Impact Study economic activities, such as strategies to finance - Includes projects whose performance may the fight against climate change; comprehensive cause moderate environmental impacts that solid waste management; a circular economy may be eliminated or minimized by adopting and clean production agreements in the easily applicable measures. Projects classified industrial, fisheries, and agriculture sectors; a in this category shall require a Semi-Detailed renewable energy, electromobility, and clean fuel Environment Impact Study (EIA-sd). strategy; vehicle junking bonuses; sustainable infrastructure, and more. • Category III: Detailed Environmental Impact Study These plans will help transition from economic - Includes those projects whose characteristics, growth to sustainable or green growth, with an size, and/or location may cause quantitatively emphasis on promoting projects that not only or qualitatively significant negative include improvements in their processes, but environmental impacts, requiring an in- also contribute protecting the environment and depth analysis to review their impacts and combating climate change. propose the corresponding environmental management strategy. Projects in this category shall require a Detailed Environmental Impact Study (EIA-d). Environmental and 197 9 Climate Change Regulations
The Paris Agreement is a historic international Peru had the chance to contribute to this agreement that was signed in December 2015 multilateral agreement and global policy decision- during the United Nations Framework Convention making during the negotiation process, as a on Climate Change's (UNFCCC) 21st Conference developing country and president of the COP20 PARIS of Parties (COP21) in Paris. Its central aim is to held in Lima. It made three significant contributions 3 strengthen the global response to the threat of to reaching the Paris Agreement: AGREEMENT: climate change, in an effort to ensure sustainable NATIONALLY development and efforts to eradicate poverty, by I. During the COP20, it resolved the issue of DETERMINED keeping a global temperature rise this century differentiating between developed and developing well below 2 °C above preindustrial levels and countries through equity and the principle of CONTRIBUTIONS pursuing efforts to limit the temperature increase shared but differentiated responsibilities and (NDC) PERU even further to 1.5 °C. The Agreement also aims respective capabilities, in light of the Parties' to increase countries' capacities for adaptation and different national circumstances (made explicit in resilience and guarantee finance flows consistent Article 2 and throughout the Agreement). with low greenhouse gas emissions and climate- resilient pathway. II. It explicitly articulated the balance between adaptation, as consequences of climate In July 2016, Peru became the first country in change, and mitigation of GHGs, as causes of Hispanic America to ratify the Paris Agreement. To climate change. date, 189 of 197 States-Parties that belong to the Convention have ratified the Agreement. III. The Lima – Paris Action Agenda, which allowed for the participation of key non-state stakeholders in 2015, such the private sector, civil society, academia, indigenous peoples, collectives, and the general public for rapport-building and dialogue. As a result, the different stakeholders assumed responsibility for solving the problem of climate change on the part of society as a whole, and not just governments. Environmental and 198 9 Climate Change Regulations
PERUVIAN NDCs The NDC mitigation components are aimed at reducing GHG emissions and conserving carbon Nationally determined contributions (NDCs) sinks for emissions management, with 62 mitigation are at the heart of the Paris Agreement and measures distributed among the following six GHG the achievement of its long-term goals. NDCs emissions sectors in Peru: embody efforts by each country to reduce national anthropogenic emissions and adapt to the impacts 1. Power-Stationary Combustion: 23 measures of climate change. 2. Power-Mobile Combustion: 14 measures 3. Industrial Processes and Use of Goods: According to Article 4 of the Paris Agreement, each 2 measures Party must prepare, communicate, and maintain successive NDCs that it adopts, reflecting the 4. Agriculture: 6 measures greatest possible ambition and taking into account 5. Land Use, Land-Use Change, and Forestry: its domestic circumstances and capabilities. 8 measures 6. Waste: 9 measures Peru has committed to reducing 30% of its predicted GHG emissions by 2030, equivalent to 89.4 The NDC adaptation components establish goals MtCO2eq compared to the base year of 2010, and targets to reduce levels of exposure and based on a “Business-as-Usual” (BAU) scenario of vulnerability to hazards associated with climate increased emissions, divided as follows: change in 91 adaptation measures divided into five prioritized thematic areas: • Unconditional reduction: 20% reduction via the implementation of investments and expenditures 1. Agriculture: 17 measures with national public and private resources. 2. Forests: 12 measures • Conditional reduction: 10% reduction, conditional upon the availability of international external 3. Fisheries and Aquaculture: 18 measures financing and favorable conditions, without 4. Health: 14 measures public debt. 5. Water: 30 measures
GHG EMISSIONS PREDICTIONS BETWEEN These include cross-cutting approaches for disaster 2012 AND 2030 UNDER A “BUSINESS-AS- risk management, resilient public infrastructure, USUAL” SCENARIO poverty and vulnerable populations, gender and interculturality, and private investment promotion. 350 298.3 300 265.4 250 231.8 equivalent 2 200 171.3 150 100 50 Millions of tons of CO of tons Millions of 2012 2020 2025 2030
Source: Third National Communication issued by the Republic of Peru to the United Nations Framework Commission on Climate Change, April 2016 Environmental and 199 9 Climate Change Regulations
A turning point in climate change management II. Inclusion of climate change into national in Peru came with the passage of the Framework development planning: All sector authorities, Act on Climate Change 30754, on April regional governments, and local governments 17, 2018, with the goal of establishing the must include climate risk and vulnerability, principles, approaches, and general provisions as well as the identification of mitigation and FRAMEWORK for the comprehensive, participatory, transparent adaptation measures, when formulating and 4 management of the climate change adaptation and updating their development, budget, and ACT ON mitigation measures, so as to reduce the country's spending planning policies, strategies, and CLIMATE vulnerability to climate change, take advantage of instruments. CHANGE low-carbon growth opportunities, and comply with the international commitments assumed by the III. Increase in institutional strength for addressing State with the UNFCCC. On December 31, 2019, climate change: With the goal of complying the Regulations on the Framework Act on Climate with the periodic updating of our NDCs, the Change were approved. The application of these Law mandates the establishment of a High- regulations seeks to guarantee sustainable low- Level Climate Change Commission for the carbon growth and reduce economic losses through purpose of proposing the adaptation and the adequate management of climate risks. mitigation measures that will form part of the NDCs. This multisectoral space, chaired by the This law ensures that the country will be better Prime Minister, allows for ongoing articulation prepared to tackle climate events and create and coordination among state actors with the the conditions for the growth of clean and objective of defining and updating the NDCs to sustainable industries. It is aligned with the be submitted to the UNFCCC. countries commitment to the United Nations Sustainable Development Goals (SDGs) and the IV. Increase in the competitiveness of investment recommendations that must be addressed for and the national public budget: The goal is the country's admission into the Organization for to ensure the sustainability of government Economic Cooperation and Development (OECD). investment and budgeting. For such purpose, the MEF must incorporate climate risk and The Framework Act on Climate Change allows vulnerability analysis, as well as the identification the government to increase public spending of climate change mitigation and adaptation efficiency, representing savings for the country measures, when preparing and implementing and a key investment for avoiding costs and taking public investment projects, as well as economic advantage of opportunities for all of the country's instruments that channel the public budget. This stakeholders: the public and private sectors, civil will help obtain positive returns by reducing costs society organizations, academia, indigenous for restoration, reconstruction, and repair. peoples, and others. V. Support for science and technology: According The principal components included in this Law are to the Law, all public institutions with the as follows: mission of scientific research and technological development must prepare research and I. Articulation with the international context: technology transfer studies, projects, and The purpose of this Law is to comply with the programs with the purpose of improving and international commitments assumed by the increasing the adaptive capabilities of the Peruvian state with the UNFCCC, which will population, ecosystems, infrastructure, and enable it to support worldwide efforts to prevent production systems; and contributing to the the global temperature from rising more than reduction of GHG emissions and the increase and 1.5° C above preindustrial levels. conservation of carbon reserves. Environmental and 200 9 Climate Change Regulations
The mitigation measures for achieving Peru's NDCs ECONOMIC BENEFITS FROM REDUCTION OF aim to monitor and reduce GHG emissions. As part GHG EMISSIONS of these efforts, the public and private sectors have been involved. In November 2019, the MINAM— According to preliminary estimates and results PERU'S as the national authority on matters of climate of the Technical Study toward Long-Term Carbon 5 change—introduced the “Peruvian Carbon Footprint” Neutrality in Peru being prepared by the MINAM, CARBON online platform. This innovative tool is the first of the progressive process for the reduction of GHG FOOTPRINT its kind to be made freely available nationwide for emissions generated primarily by deforestation, public and private organizations to manage their intensive agriculture, and fossil fuel consumption in GHG emissions via four components: production, trade, and industrial activities may offer a net economic benefit for the country of USD98 1. Emissions calculator: Free calculator to measure billion by 2050. GHG emissions based on international standard ISO 14064-1. 2. Recognition system: Incremental system for recognizing organizations through four levels of stars: i) 1 star: Measurement of emissions. ii) 2 stars: Verification of footprint calculation results by an accredited third party. iii) 3 stars: Emissions reduction. iv) 4 stars: Offsetting or neutralization of emissions 3. Registry: Public registry of participating organizations indicating the degree of ambition of their GHG emissions management. 4. Neutralization information: List of national projects that offer emissions reductions to neutralize carbon footprints through the purchase of carbon credits.
To date, 76 Peruvian organizations have been recognized for reporting, reducing, and/or offsetting their GHG emissions for 2019, a huge increase considering that just 26 organizations used the platform to report their carbon footprint management in 2018. Environmental and 201 9 Climate Change Regulations
The current linear economy is based on a “take- 1. Approach 1: Sustainable Industrial Production make-waste” production and consumption model, in a. Line of action: Incentivize industrial production which goods are manufactured using raw materials through a circular economy approach. that are then sold, used, and ultimately discarded b. Line of action: Manage information tied to ROADMAP TO as waste. While it is true that important steps have circular production. 6 been taken toward efficiency, the linear system is A CIRCULAR based on consumption instead of the restorative 2. Approach 2: Sustainable Consumption ECONOMY use of resources, which involves significant losses c. Line of action: Foster sustainable consumption throughout the value chain. habits in the public and private sectors and A circular economy, on the other hand, is among the general public. internationally restorative and regenerative, so that goods, components, and materials conserve 3. Approach 3: Use of Discarded Materials and their usefulness and maximum value at all times, Industrial Waste Management distinguishing between technical and biological d. Line of action: Promote the use of discarded cycles. This continuous positive development cycle materials and the valorization of industrial preserves and improves natural capital (worldwide waste. stocks of assets that include natural resources, ecosystems, and living beings), optimizes resource 4. Approach 4: Innovation and Financing yield, and minimizes system risks by managing finite e. Line of action: Incentivize innovation and the reserves and renewable flows. use of clean and sustainable technologies f. Line of action: Design mechanisms and In February 2020, Executive Order (Decreto incentives to promote innovative initiatives Supremo) 003-2020-Produce approved the and clean technologies. Roadmap to a Circular Economy in the Industrial Sector, an initiative jointly prepared by MINAM and PRODUCE with the goal of promoting inclusive and sustainable economic growth and industrial development.
This law is based on four approaches, six lines of action, and sub-actions with short-term (one year), medium-term (three years), and long-term (five years) goals with the participation of the public sector, the private sector (in the form of industry trade groups), academia, research and innovation centers, among others, to identify and develop actions to promote and facilitate competitiveness and productivity, with a circular economy approach. ANNEXES 10 203
ANNEXES Principal 1CENTRAL RESERVE BANK OF PERU - BCRP Regulatory and (BANCO CENTRAL DE RESERVA DEL PERÚ - BCRP) Tel: +51 1 613 2000 Investment www.bcrp.gob.pe The Central Reserve Bank of Peru (BCRP) is an Promotion autonomous constitutional institution of the Peruvian State. According to the Constitution, the faculties of the BCRP are to regulate the currency and the credit in the financial system, Entities in Peru manage international reserves under its care, and other functions indicated in the law that created the institution. Likewise, the Constitution orders the BCRP to issue coins and paper money and to accurately inform the country from time to time on the state of national finances. It also has the responsibility of maintaining monetary stability, avoiding the pressures of inflation and depreciation on the economy.
2OFFICE OF THE PRIME MINISTER - PCM PRESIDENCIA DEL CONSEJO DE MINISTROS - PCM
Tel: +51 1 219 7000 www.gob.pe/pcm
The Office of the Prime Minister is the technical- administrative institution of the Executive Branch, whose maximum authority is the President of the Republic of Peru. It coordinates and follows up on multi-sector policies and programs of the Executive Branch. It also carries out coordinated actions with the Congress and different constitutional entities. Annexes 204 10 Principal Regulatory and Investment Promotion Entities in Peru
3MINISTRY OF ECONOMY AND 5NATIONAL INSTITUTE FOR FINANCE - MEF THE DEFENSE OF FREE (MINISTERIO DE ECONOMÍA Y FINANZAS - MEF) COMPETITION AND THE Tel: +51 1 311 5930 PROTECTION OF INTELLECTUAL www.mef.gob.pe PROPERTY - INDECOPI (INSTITUTO NACIONAL DE DEFENSA DE LA The Ministry of Economy and Finance (MEF) is COMPETENCIA Y DE LA PROTECCIÓN DE LA PROPIEDAD an entity of the Executive Branch responsible for INTELECTUAL - INDECOPI) planning, directing, and controlling matters related to the budget, treasury, debt, accounting, fiscal Tel: +51 1 224 7777 policy, public spending, and economic and social www.indecopi.gob.pe/indecopi policies. It also designs, establishes, performs, and supervises national and sector policies under its INDECOPI promotes a culture of fair competition and jurisdiction, assuming a guiding role therein. protects all forms of intellectual property (trademarks, copyrights, patents, and biotechnology).
MINISTRY OF LABOR AND 4 SUPERVISORY BOARD FOR EMPLOYMENT PROMOTION - 6 MTPE INVESTMENT IN ENERGY AND (MINISTERIO DE TRABAJO Y PROMOCIÓN DEL EMPLEO MINING - OSINERGMIN - MTPE) (ORGANISMO SUPERVISOR DE LA INVERSIÓN EN ENERGÍA Y MINERÍA - OSINERGMIN) Tel: +51 1 630 6000 www.mintra.gob.pe Tel: +51 1 219 3400 / +51 1 219 3410 +51 1 427 4935 The Ministry of Labor and Employment Promotion www.osinergmin.gob.pe (MTPE) is the State institution responsible for designing, coordinating, and executing the policies OSINERGMIN is responsible for supervising and and programs aimed at creating and improving controlling compliance with legal and technical dignified and productive work through the provisions of activities developed by companies in promotion of job market insertion opportunities the electricity and hydrocarbons subsectors, as well and skills, as well as fostering a democratic system as compliance with legal and technical regulations of labor relations through labor coordination, related to the conservation and environmental surveillance of compliance with laws, conflict protection. It is also in charge of quality and prevention and resolution, and the improvement of quantity control of fuels and higher prerogatives as working conditions. part of its power to impose sanctions. Annexes 205 10 Principal Regulatory and Investment Promotion Entities in Peru
7SUPERVISORY BOARD FOR 9PRIVATE INVESTMENT PRIVATE INVESTMENT IN PROMOTION AGENCY - TELECOMMUNICATIONS - PROINVERSIÓN OSIPTEL (AGENCIA DE PROMOCIÓN DE LA INVERSIÓN PRIVADA - PROINVERSIÓN) (ORGANISMO SUPERVISOR DE INVERSIÓN PRIVADA EN TELECOMUNICACIONES - OSIPTEL) Tel: +51 1 200 1200 Tel: +51 1 225 1313 www.proinversion.gob.pe www.osiptel.gob.pe ProInversión promotes investment that does not OSIPTEL is in charge of regulating and supervising depend on the Peruvian State, in charge of the public telecommunication services market, agents under the private system in order to independently of the operating companies. improve the country's competitiveness and sustainable development and thus improve the population's welfare.
8SUPERVISORY BOARD FOR INVESTMENT IN NATIONAL PUBLIC TRANSPORTATION 10 SUPERINTENDENCY OF LABOR INFRASTRUCTURE – OSITRAN AUDITING – SUNAFIL (ORGANISMO SUPERVISOR DE LA INVERSIÓN EN (SUPERINTENDENCIA NACIONAL DE FISCALIZACIÓN INFRAESTRUCTURA DE TRANSPORTE DE USO LABORAL – SUNAFIL) PÚBLICO – OSITRAN) Tel: +51 1 390 2800 Tel: +51 1 500 9330 www.sunafil.gob.pe www.ositran.gob.pe SUNAFIL is a specialized technical entity The general purpose of OSITRAN is to regulate, that forms part of the Ministry of Labor and govern, supervise, and audit the behavior of the Employment Promotion (MTPE), and is responsible markets under its jurisdiction, with regard to for promoting, supervising, and auditing the the actions of service providers, as well as the compliance with labor laws and those related to compliance with concession agreements, impartially occupational health and safety. and objectively holding harmless the interests of the State, investors, and users. Annexes 206 10 Principal Regulatory and Investment Promotion Entities in Peru
11SUPERINTENDENCY OF 13NATIONAL SUPERINTENDENCY BANKING AND INSURANCE OF SANITATION SERVICES - AND PRIVATE PENSION FUND SUNASS MANAGEMENT COMPANIES - (SUPERINTENDENCIA NACIONAL DE SERVICIOS DE SANEAMIENTO - SUNASS) SBS (SUPERINTENDENCIA DE BANCA, SEGUROS Y AFP - Tel: +51 1 614 3200 SBS) www.sunass.gob.pe
Tel: +51 1 630 9000 The SUNASS is a decentralized public institution www.sbs.gob.pe that rules, regulates, supervises and controls water and sewage services provided, impartially and SBS es el organismo encargado de la regulación y objectively protecting the interests of the State, supervisión de los sistemas financieros, de seguros investors, and users. y del sistema privado de pensiones. Su objetivo primordial es preservar los intereses de los depositantes, de los asegurados y de los afiliados al SPP. 14PERUVIAN SECURITIES AND EXCHANGE SUPERINTENDENCY – SMV NATIONAL SUPERINTENDENCY (SUPERINTENDENCIA DEL MERCADO DE VALORES – 12 SMV) OF PUBLIC RECORDS OFFICES - SUNARP Tel: +51 1 610 6300 (SUPERINTENDENCIA NACIONAL DE LOS REGISTROS www.smv.gob.pe PÚBLICOS - SUNARP) The SMV is a specialized technical institution Tel: +51 1 208 3100 attached to the Ministry of Economy and Finance www.sunarp.gob.pe (MEF) designed to oversee the protection of investors, the efficiency and transparency of the The mission of the SUNARP is to provide legal markets under its supervision, the correct setting security and certainty on ownership of different of prices, and the dissemination of all information rights registered with it, backed by modernization, necessary to achieve these goals. It has legal simplification, integration and the specialization of status of domestic public law and has complete registration nationwide. functional, administrative, economic, technical, and budgetary autonomy. Annexes 207 10 Principal Regulatory and Investment Promotion Entities in Peru
15NATIONAL 17ENVIRONMENTAL SUPERINTENDENCY ASSESSMENT AND OF CUSTOMS AND TAX SUPERVISORY BOARD – OEFA ADMINISTRATION - SUNAT (ORGANISMO DE EVALUACIÓN Y FISCALIZACIÓN AMBIENTAL – OEFA) (SUPERINTENDENCIA NACIONAL DE ADMINISTRACIÓN TRIBUTARIA - SUNAT) Tel: +51 1 204 9900 www.oefa.gob.pe Tel: +51 1 315 0730 www.sunat.gob.pe The OEFA is the guiding entity of the National Environmental Assessment and Supervisory The SUNAT also includes the National Customs System (SINEFA) and is responsible as such for Superintendency. It is in charge of managing, the evaluation, supervision, and auditing of the supervising, and collecting domestic taxes, with compliance with environmental laws nationwide, the exception of municipal taxes. It also manages integrating the efforts of the State and society and controls the international trafficking in in a coordinated and transparent manner to goods within customs territory and collects the ensure the effective management and protection duties applicable by law, facilitates foreign trade of the environment. economic activities, and inspects the international traffic in persons and the means of transportation. It also conducts the actions necessary to prevent and punish customs crimes.
18MINISTRY OF ENERGY AND MINES - MINEM (MINISTERIO DE ENERGÍA Y MINAS - MINEM) GENERAL BUREAU OF 16 Tel: +51 1 411 1100 ENVIRONMENTAL HEALTH - www.minem.gob.pe DIGESA (DIRECCIÓN GENERAL DE SALUD AMBIENTAL - DIGESA) El MINEM es la entidad encargada de promover el desarrollo y uso de los recursos energéticos Tel: +51 1 631 4430 de forma racional, eficiente y comepetitiva en www.digesa.minsa.gob.pe un contexto de descentralización y desarrollo regional, priorizando la inversión privada, la DIGESA is the technical regulator on issues related satisfacción de la demanda, así como el uso de to basic health, occupational health, food hygiene, energías renovables. Asimismo, promueve el zoonosis, and protection of the environment. desarollo de la industria minera, velando por la estabilidad legal, la explotación racional y la introducción de nuevas tecnologías. Annexes 208 10 Principal Regulatory and Investment Promotion Entities in Peru
19MINISTRY OF TRANSPORTATION AND COMMUNICATIONS - MTC (MINISTERIO DE TRANSPORTES Y COMUNICACIONES - MTC)
Tel: +51 1 615 7800 www.mtc.gob.pe
The Ministry of Transportation and Communications (MTC) is the Peruvian Government entity that seeks to ensure rational territorial order with respect to resources, production, markets, and population, through the regulation, promotion, implementation, and supervision of transportation and communications infrastructure.
20MINISTRY OF FOREIGN TRADE AND TOURISM - MINCETUR (MINISTERIO DE COMERCIO EXTERIOR Y TURISMO - MINCETUR)
Tel: +51 1 513 6100 www.mincetur.gob.pe
The Ministry of Foreign Trade and Tourism (MINCETUR) is the Peruvian Government entity responsible for formulating, directing, coordinating, implementing, and supervising foreign trade policy, with the exception of tariff regulations; and tourism policy, in accordance with general government policy and in coordination with the sectors and institutions within its jurisdiction. 209
ANNEXES Economic 1MINISTRY OF FOREIGN AFFAIRS: EXECUTIVE OFFICE FOR Promotion ECONOMIC PROMOTION – MRE - DPE Institutions (MINISTERIO DE RELACIONES EXTERIORES: DIRECCIÓN GENERAL DE PROMOCIÓN ECONÓMICA – MRE - DPE)
The Executive Office for Economic Promotion (DPE) and Relevant is the institution of the Ministry of Foreign Affairs (MRE) responsible for coordinating with Peruvian missions abroad in an effort to promote Peru as a Entities country capable of providing goods and services in international markets, as well as positioning it as a world-renowned tourist destination, and a country with interesting business and investment opportunities in different economic sectors.
It should be noted that the DPE has a Quality Management System certified with ISO 9001:2008 International Standard, governed under the values of equality, social commitment, honesty, transparency, and teamwork, thus ensuring that the needs of its national and international users are met.
The DPE reaffirms its commitment to provide services with high standards of quality, excellence, and continuous improvement in the development of the certified processes, such as:
• Support for exporters, investors, and travel agents • Support for trade, investment, and tourism missions • Response to requests • Training • Dissemination of opportunities • Organization of events • Resolution of trade problems and impasses Annexes 210 10 Economic Promotion Institutions and Relevant Entities
Services Offered by the DPE Through its • Contact Three Departments • Eduardo Chávarri García Trade Promotion Bureau – PCO Ambassador (Address de Promoción del Comercio - PCO) Director General of Economic Promotion • Dissemination of business opportunities Tel: +51 1 204 3360 / +51 1 204 3361 • Dissemination of the export offer Fax: +51 1 204 3362 • Support in the solution of trade problems between Email: [email protected] companies • Identification of business opportunities • Ana Cecilia Gervasi Díaz • Support to trade missions and their participation in Minister fairs abroad Director of Investment Promotion • Support to exporters in the resolution of trade Tel: +51 1 204 3384 impasses Email: [email protected] • Organization of trade events
Investment Promotion Bureau – PIN • Sergio Ávila Traverso (Address de Promoción de las Inversiones - PIN) Minister • Participation in the negotiation of Foreign Director of Tourism Promotion Investment Promotion Agreements Tel: +51 1 204 3391 • Dissemination of investment opportunities (federal, Email: [email protected] regional, and municipal governments) • Coordination of international events for investment • Adriana Lourdes Velarde Rivas promotion (road shows, videoconferences, fairs, Minister Counselor and seminars) Director of Trade Promotion • Preparation and coordination of an agenda for Tel: +51 1 204 3368 foreign business missions Email: [email protected] • Dissemination of specialized information on foreign investment • Address: Jr. Lampa 545, Lima 1 • Support in the identification of investment possibilities and strategic alliances • Tel: +51 1 204 3361 / +51 1 204 3365 (DPE) • Dissemination of tenders and international +51 1 204 3369 (PCO) bidding processes called by public and private +51 1 204 3385 (PIN) Peruvian entities +51 1 204 3392 (PTU) Tourism Promotion Bureau – PTU • Fax: +51 1 204 3362 (Address de Promoción del Turismo - PTU) • Email: [email protected] • Dissemination of tourism offer • Website: www.gob.pe/rree • Support for culinary events • Dissemination of tourism materials • Support for tourism promotion fairs abroad • Support for agendas involved in the promotion of tourism • Promotion and negotiation of tourism agreements • Dissemination of tourism information obtained by our missions abroad Annexes 211 10 Economic Promotion Institutions and Relevant Entities
2MINISTRY OF FOREIGN TRADE AND TOURISM (MINCETUR) AND PERUVIAN COMMISSION FOR THE PROMOTION OF EXPORTS AND TOURISM (PROMPERÚ) (MINISTERIO DE COMERCIO EXTERIOR Y TURISMO, Y PROMPERÚ)
The Ministry of Foreign Trade and Tourism PromPerú (MINCETUR) defines, directs, carries out, coordinates, and supervises foreign trade and PromPerú is the agency of the Ministry of Foreign tourism policies. In coordination with the Ministry of Trade and Tourism (MINCETUR) that is in charge Foreign Affairs (MRE) and the Ministry of Economy of developing strategies to produce an integrated and Finance (MEF) and the other Government and attractive image of Peru. This image will help sectors in their related areas, it is responsible for develop domestic tourism and promote the country the promotion of exports and international trade to the world as a privileged destination for inbound negotiations. Likewise, it is in charge of regulating tourism and investment. It is also in charge of the Foreign Trade. The Minister leads international promoting Peruvian exports. trade negotiations on behalf of the State and may sign related agreements, within its sphere of • Contact competence. With regard to tourism, the Ministry promotes, guides, and regulates tourism activities • Luis Torres Paz in order to encourage the sustainable development Executive President thereof, including the promotion, guidance, and Address: Av. Jorge Basadre 610, San Isidro - regulation of handicrafts. Lima, Peru Tel: +51 1 616 7300 • Contact +51 1 616 7400 • Claudia Cornejo Mohme Email: [email protected] Minister Website: www.promperu.gob.pe Address: Calle Uno Oeste 050 Urb. Córpac, San Isidro Tel: +51 1 513 6100 Website: www.mincetur.gob.pe
Annexes 212 10 Economic Promotion Institutions and Relevant Entities
3PRIVATE INVESTMENT PROMOTION AGENCY - PROINVERSIÓN (AGENCIA DE PROMOCIÓN DE LA INVERSIÓN PRIVADA – PROINVERSIÓN)
ProInversión is a public entity attached to the ►Post-Incorporation: Ministry of Economy and Finance (MEF) and is • Establishment of a network of contacts with public in charge of executing the national policy for and private companies. promoting private investment. • Guidance for the expansion of the business. • Identification of administrative barriers. Its mission is to promote investment via agents in the private sector, in order to boost Peru's competitiveness and sustainable development and • Contact thus improve the wellbeing of the population. • Rafael Ugaz Vallenas ProInversión provides information to potential Executive Director investors regarding the incorporation of a business in Peru, identifying investment opportunities by Address: Headquarters (Lima): Av. Enrique sectors, learning about the processes of Public- Canaval Moreyra Nº 150, piso 9, San Isidro – Private Partnerships (PPP), among others. Lima 27 Tel: +51 1 200 1200 ProInversión offers its services for investments in Fax: +51 1 221 2941 Peru free of charge, in three stages: Email: [email protected] ►Pre-Incorporation Website: www.proinversion.gob.pe • General information service: macroeconomic data, legal framework, tax system, etc. • Decentralized Offices: • Specific information service, at the request of the - Arequipa: Pasaje Belén N° 113 – Vallecito, potential investor. Arequipa • Preparation of agendas with: potential partners, Tel: +51 54 608 114 suppliers, clients, authorities, associations, unions, etc. Fax: +51 54 608 115 - Piura: Calle Los Manzanos, Mz. Ñ, Lt. 23, ►Incorporation Urbanización Santa María del Pinar, Piura • Guidance on obtaining municipal permits and licenses for the establishment of an industrial or Tel / Fax: +51 73 309 148 / +51 73 310 081 commercial business. • Contact and accompaniment to the regions and potential production zones. • Advisory on migratory processes for entry and residence of business people. Annexes 213 10 Economic Promotion Institutions and Relevant Entities
4PERUVIAN FOREIGN TRADE 5NATIONAL CONFEDERATION ASSOCIATION - COMEXPERÚ OF PRIVATE BUSINESS (SOCIEDAD DE COMERCIO EXTERIOR DEL PERÚ - INSTITUTIONS - CONFIEP COMEXPERÚ) (CONFEDERACIÓN NACIONAL DE INSTITUCIONES PRIVADAS - CONFIEP) ComexPeru is the private association that groups the leading companies involved in foreign trade The National Confederation of Private Business in Peru. Its main purpose is to contribute to the Institutions (CONFIEP) brings together and improvement of competitive conditions within a represents private business activities within Peru free market environment that will make Peru an and abroad. Its principal objective is to contribute attractive destination for private investment. to the process of sustained economic growth, based on investment and job creation through • Objectives and Guidelines individual effort and initiative, the promotion of entrepreneurship and private property. • Promote the development of foreign trade • Defend free market policies • Objectives and Guidelines • Encourage private investment • Business unity: Strengthen the union between • Contact Peruvian business entrepreneurs to build an order in which free enterprise and a market • Juan Fernando Correa Malachowski economy are the distinguishing features. General Manager • Representation: Act as the principal Tel: +51 1 625 7700 spokesperson for entrepreneurs nationwide before the State, and in public and Fax: +51 1 625 7701 private forums. Website: www.comexperu.org.pe • Services: Promote greater communication and coordination between business sectors, and support, back, and provide advice to the business community.
• Contact
• María Isabel León de Céspedes President Av. Víctor Andrés Belaunde 147, Edificio Real Tres, Of. 401 San Isidro, Lima - Peru Tel: +51 1 415 2555 Fax: +51 1 415 2566 Website: www.confiep.org.pe Annexes 214 10 Economic Promotion Institutions and Relevant Entities
6ASSOCIATION OF CAPITAL MARKETS BUSINESS PROMOTERS - PROCAPITALES (ASOCIACIÓN DE EMPRESAS PROMOTORAS DEL MERCADO DE CAPITALES - PROCAPITALES) • Objectives and Guidelines The Association of Capital Markets Business Promoters (Procapitales) brings together the • Promote the development of new investment principal actors in the market, channeling their instruments concerns and proposals. It acts as a business guild to focus fundamentally on promoting investment • Encourage access by new issuers of fixed-income and capital markets. It speaks on behalf of its and equity securities associates to the public sectors with proposals • Promote the mobilization of institutional investor to reduce legal costs and bureaucratic barriers resources through new intermediary vehicles that hinder easy market access. The institution's • Actively promote improvements in legislation principal objective is to encourage an efficient and the regulation of the capital market legal framework and appropriate corporate • Disseminate and encourage the implementation governance practices. of good corporate governance practices • Create a permanent, proactive, and organized space for dialogue and interaction between agents in the market, including the regulatory and supervisory institutions • Contribute to the institutional strengthening of agents participating in the capital market
• Contact
• Miguel Eduardo Puga De La Rocha President Address: Av. Canaval y Moreyra 230 of. 5A, San Isidro, Lima - Peru Tel: +51 1 440 1080 Website: www.procapitales.org Annexes 215 10 Economic Promotion Institutions and Relevant Entities
7LIMA CHAMBER OF COMMERCE - CCL (CÁMARA DE COMERCIO DE LIMA - CCL) The Lima Chamber of Commerce (CCL) groups For the last 128 years, the Lima Chamber of together over 14,000 member companies, Commerce (CCL) has represented and defended the including the Chamber of Commerce, Production, interests of the business class before the country's and Services (Perucamaras) which, in turn, authorities, as well as national and foreign entities. groups together the country's 63 chambers and As part of its activities, it promotes free market associations. policies and free competition with a sense of social responsibility, as well as fair and honest competition • Contact within a framework of values and ethical principles, fostering domestic and foreign trade and promoting • Peter Anders Moores good commercial practices. President Address: Av. Giuseppe Garibaldi 396 Jesús The Lima Chamber of Commerce (CCL) is a strategic María, Lima partner of the State, cooperating to ensure that the Tel: +51 1 463 3434 laws and other provisions foster national social and economic prosperity, taking the initiative in offering Website: www.camaralima.org.pe proposals and assuming responsibility in the activities entrusted to it by the State. It attempts to maintain close relations among all organizations representing business activities and cooperation for development, both Peruvian and international, especially supporting the decentralization of production. As a complementary activity, it conciliates interests and manages arbitration proceedings in an affordable and democratic manner between companies or business people, trying to ensure quick and friendly agreements.
The vision of the Lima Chamber of Commerce (CCL) is to be the country's leading business association, respected by society and a reference point for the opinion of the business class. Annexes 216 10 Economic Promotion Institutions and Relevant Entities
8inPERU 9NATIONAL ASSOCIATION OF INDUSTRIES - SNI The founding of inPeru was officially announced (SOCIEDAD NACIONAL DE INDUSTRIAS - SNI) on January 11, 2012, as a non-profit association for the promotion of investment in Peru among the The National Association of Industries (SNI) is the principal international financial markets, seeking institution that groups together Peru's private an exchange of better practices and, in general, industrial companies. It is a private-law, non-profit providing information on Peru as a destination legal entity. for a range of investment opportunities. The founders of inPeru include the following private The members of the SNI currently include over institutions: Lima Stock Exchange (BVL); Cavali; 1,000 of the most representative companies of the Private Pension Fund Management Association country's industrial sector, accounting for 90% of (AFP); Peruvian Banking Association (ASBANC); the gross value of national production. It should be Procapitales; Peruvian Finance Association noted that 16% of Peru's Gross Domestic Product (APEF); National Confederation of Private (GDP) is contributed by the industrial sector. Business Institutions (CONFIEP); and the Peruvian Association of Insurance Companies (APESEG). • Contact It also has the support of the Peruvian State, through the Ministry of Economy and Finance • Ricardo Márquez Flores (MEF); the Ministry of Foreign Affairs (MRE), President the Central Reserve Bank of Peru (BCRP); the Superintendency of Banking and Insurance Address: Los Nogales 340, San Isidro, Lima and Pension Fund Management Companies Tel: +51 1 616 4444 (SBS); the Peruvian Securities and Exchange Website: www.sni.org.pe Superintendency (SMV); the Private Investment Promotion Agency (ProInversión); and PromPerú. Annexes 217 10 Economic Promotion Institutions and Relevant Entities
10NATIONAL INSTITUTE OF STATISTICS AND INFORMATION - INEI (INSTITUTO NACIONAL DE ESTADÍSTICA E INFORMÁTICA - INEI)
The INEI is the entity responsible for producing and • Contact disseminating the official statistical information that the country needs with the quality, timeliness, • Dante Rafael Carhuavilca Bonett and coverage required, in order to contribute to the Head of the National Institute of Statistics and design, monitoring, and evaluation of public policies Information (INEI) and the decision-making process of socioeconomic Address: Av. Gral. Garzón 654 - 658, Jesús agents, the public sector, and the community in María, Lima - Perú general. Tel: +51 1 652 0000 Its main duties include: Website: www.inei.gob.pe
• Formulating and evaluating the National Statistics Policy and Plan, as well as coordinating and guiding on the formulation and evaluation of sectorial, regional, local, and institutional plans. • Coordinating and/or carrying out the production of basic statistics through censuses, sample-based surveys, and administrative records on the public sector, as well as keeping census maps up-to-date. • Entering into agreements on technical assistance, specialized training, and the provision of statistic- related services. • Regulating, guiding, and evaluating the organization of the Statistic Offices of the National Statistics System, as well as promoting the creation of Statistic Offices. • Coordinating, providing opinions, and supporting national and international projects for the provision of financial technical assistance required in matters of statistics by the entities of the National Statistics System at all levels. • Safeguarding the confidentiality of the information produced by the entities of the system. Annexes 218 10 Principal Regulatory and Investment Promotion Entities in Peru
11PERUVIAN ASSOCIATION OF 13ASSOCIATION OF PRIVATE EXPORTERS - ADEX PENSION FUND MANAGEMENT (ASOCIACIÓN DE EXPORTADORES DEL PERÚ - ADEX) COMPANIES - AFP (ASOCIACIÓN DE ADMINISTRADORAS PRIVADAS DE The Peruvian Association of Exporters (ADEX) is a FONDOS DE PENSIONES - AFP) business institution founded in 1973 to represent and provide services to its members: exporters, • Contact importers, and trade service providers. It is an association made up of large, medium, and small enterprises whose common denominator is their • Giovanna Prialé Reyes vision of achieving ambitious business objectives. President Address: Calle Antequera 580, San Isidro, Lima • Contact 27, Peru Tel: +51 1 399 3000 • Erik Fischer Llanos Website: www.asociacionafp.com.pe President Address: Av. Javier Prado Este 2875 San Borja, Lima Tel: +51 1 618 3333 Website: www.adexperu.org.pe 14PERUVIAN BANKING ASSOCIATION - ASBANC (ASOCIACIÓN DE BANCOS DEL PERÚ - ASBANC)
• Contact PERUVIAN AUTOMOTIVE 12 • Martín Naranjo Landerer ASSOCIATION - AAP President (ASOCIACIÓN AUTOMOTRIZ DEL PERÚ - AAP) Address: Calle 41 No. 975, Urb. Córpac, San Isidro, Lima 27, Peru • Contact Tel: +51 1 612 3333 • Armando Negri Piérola Fax: +51 1 612 3316 President Website: www.asbanc.com.pe Address: Av. República de Panama 3956, Surquillo, Lima Tel: +51 1 640 3637 Email: [email protected] Website: www.aap.org.pe Annexes 219 10 Principal Regulatory and Investment Promotion Entities in Peru
15REAL ESTATE DEVELOPERS 17ASSOCIATION FOR THE ASSOCIATION - ADI PERU PROMOTION OF NATIONAL (ASOCIACIÓN DE DESARROLLADORES INMOBILIARIOS INFRASTRUCTURE - AFIN - ADI PERU) (ASOCIACIÓN PARA EL FOMENTO DE LA INFRAESTRUCTURA NACIONAL - AFIN) • Contact
• Contact • Marco del Río Arrieta President • Leonie Roca Voto Bernales Address: Av. Camino Real 348, Torre El Pilar, President Of. 703, San Isidro, Perú. Address: Av. Jorge Basadre 310 Oficina 601-D, Tel: +51 1 99 983 438 San Isidro, Lima 27, Perú Email: [email protected] Tel: +51 1 441 1000 Website: www.adiperu.pe/asociacion Fax: +51 1 422 7611 Email: [email protected] Website: www.afin.org.pe
16NATIONAL ASSOCIATION OF PHARMACEUTICAL LABORATORIES - ALAFARPE 18PERUVIAN POULTRY (ASOCIACIÓN NACIONAL DE LABORATORIOS ASSOCIATION - APA FARMACEÚTICOS - ALAFARPE) (ASOCIACIÓN PERUANA DE AVICULTURA - APA)
• Contact • Contact
• Valeria Kyska • Julio Favre Arnillas President President Address: Calle Los Pelícanos 130, San Isidro, Address: Av. Esmeralda 255, Chacarilla del Lima 27, Perú Estanque, Tel: +51 1 441 0693 San Borja, Lima 41, Perú Fax: +51 1 441 1745 Tel: +51 1 372 1540 Email: [email protected] Email: [email protected] Website: alafarpe.org.pe Website: www.apa.org.pe Annexes 220 10 Principal Regulatory and Investment Promotion Entities in Peru
PERUVIAN ASSOCIATION OF LIMA STOCK EXCHANGE – BVL 19 21(BOLSA DE VALORES DE LIMA – BVL) INSURANCE COMPANIES -
APESEG • Contact (ASOCIACIÓN PERUANA DE EMPRESAS DE SEGUROS - APESEG) • Claudia Cooper President • Contact Address: Pasaje Acuña 106, Lima - Perú
• Eduardo Morón Pastor Tel: +51 1 619 3333 President Website: www.bvl.com.pe Address: Calle Amador Merino Reyna 307, Edificio Nacional - piso 9, San Isidro, Lima - Peru Email: [email protected] Website: www.apeseg.org.pe
22PERUVIAN CHAMBER OF CONSTRUCTION - CAPECO (CÁMARA PERUANA DE LA CONSTRUCCIÓN - CAPECO) 20PERUVIAN ASSOCIATION OF • Contact PORT OPERATORS - ASPPOR (ASOCIACIÓN PERUANA DE OPERADORES • Humberto Martínez PORTUARIOS - ASPPOR) President Address: Av. Victor Andrés Belaunde 147 • Contact (Edificio Real 3) Oficina 401, San Isidro, Lima - Perú • José Vicente Silva Vidaurre Tel: +51 1 230 2700 President Website: www.capeco.org Address: Larco 360, La Punta, Callao 5, Peru Tel: +51 1 465 5982 Fax: +51 1 453 0697 Website: www.asppor.org.pe Annexes 221 10 Principal Regulatory and Investment Promotion Entities in Peru
23FEDERATION OF PRIVATE 25NATIONAL FISHERIES TERTIARY EDUCATION ASSOCIATION - SNP INSTITUTIONS - FIPES (SOCIEDAD NACIONAL DE PESQUERÍA - SNP) (FEDERACIÓN DE INSTITUCIONES PRIVADAS DE EDUCACIÓN SUPERIOR - FIPES) • Contact
• Contact • Cayetana Aljovín Gazzani President • Juan Manuel Ostoja Address: Av. República de Pamamá 3591, President piso 9, San Isidro, Lima 27, Peru Address: Av. Horacio Urteaga 1781, Tel: +51 1 422 8844 Jesús María, Lima - Peru Email: [email protected] Tel: +51 1 601 6480 Website: snp.org.pe Fax: +51 1 313 3344 Email: [email protected] Website: www.fipes.pe
24NATIONAL SOCIETY OF MINING, OIL AND ENERGY - SNMPE (SOCIEDAD NACIONAL DE MINERÍA, PETRÓLEO Y ENERGÍA - SNMPE)
• Contact
• Raúl Jacob Ruisánchez President Address: Calle Francisco Graña 671, Magdalena del Mar, Lima 17, Peru Tel: +51 1 215 9250 Fax: +51 1 460 1616 Email: [email protected] Website: www.snmpe.org.pe 222
ANNEXES EY is the leading business consulting firm in Peru, assisting companies through its consulting, auditing, tax, strategy and transaction and corporate finance services for the Financial EY Services Industry (FSO).
At EY, we focus on helping our clients achieve for Business their full business potential, aiding them in improving their management. Our global network of professionals will help investors find and Investment financial, strategic, and operational alternatives to improve their liquidity, financial standing and performance, thus helping them to develop in Peru sustainable business in both the short and long terms.
Our approach is based on combining leading practices and methodologies with innovative thinking, adapting and renewing our services based on each client. Not all organizations are the same, and changes have a different impact on each one of them. High-performance companies know that confidence attracts success, and that is the reason why more and more companies in Peru decide to work with EY. Annexes 223 10 EY Services for Business and Investment in Peru
1ASSURANCE AUDIT SERVICES Financial statement auditing and special reviews Rafael Huamán At EY we contribute local and international skills • Financial statement audits. Assurance and Corporate and experience in our audits, helping companies • Internal control audits. Integrity Leader to guarantee the quality and integrity of their financial information, as well as giving the market • Special reviews for companies that will be audited [email protected] confidence in their transparency and accuracy. for the first time or plan to issue shares or bonds in the market. • Special reviews for process and control We create value for your business, generating improvement. confidence in order to allow for adequate • Consulting on the implementation and/or revision decision-making. of controls in accordance with international criteria (COSO 2013). • Preparation of special reports: money laundering, market consistent embedded value, actuarial calculations, etc. Juan Paredes Audit Leader INTEGRITY AND FORENSICS SERVICES [email protected] Integrity Risks • Forensic audits for the investigation of irregular situations. • Design and implementation of corporate and ethical compliance programs (e.g., anticorruption, free competition, and similar laws). • Consulting on and evaluation of compliance with money laundering prevention and terrorist financing laws. • Forensic data analysis. • Support as expert witnesses for the settlement of disputes and lawsuits. • Ethics hotline • Consulting on reputational risk management and fraud prevention programs. • Consulting on due diligence and compliance for purchase and sale transactions. Annexes 224 10 EY Services for Business and Investment in Peru
FINANCIAL CONSULTANCY SERVICES
Consulting on International Financial Reporting IPO and Capital Markets Standards (IFRS) • Preparation of financial reporting for public offering • Diagnostic and implementation of new IFRSs (IFRS under Rule 144-A. 9, IFRS 15, IFRS 16, and IFRS 17). • Analysis of refinancing with bond issue. • Analysis of complex and unusual transactions in • Auditing support according to PCAOB standards accordance with the IFRS practices. • Issuance of comfort letters • Review of concession agreements (IFRIC 12) and accounting model analysis. • Analysis of the financial effect of tax transactions. SUSTAINABILITY AND • Assistance in the classification and measurement of CLIMATE CHANGE SERVICES financial instruments under IFRS 9. • Diagnosis and implementation of • Assistance in the impairment of financial sustainability strategies. instruments with the expected loss approach of • Preparation and verification of sustainability reports. IFRS 9. • Development of tools for results measurement and • Hedge accounting strategy and its tax treatment. evaluation of natural capital. • Review of accounting estimates: impairment of • Value chain and climate change risk assessment. non-financial assets, provision for dismantling, • Consulting and verification on the issuing of differed income tax, biological assets, real estate green bonds. investments, etc. • Specialized training programs for each industry.
Financial Reporting • Operating and systems diagnostic to speed up or improve the financial reporting process. • Development of governance (policies, processes, checks) for financial reporting presentation.
Mergers & Acquisitions – Deal Accounting • Support or performance of accounting due diligence. • Financial/accounting analysis of scenarios for acquisition structure. • Counseling on Purchase-Price Allocation (PPA) under IFRS 3. Annexes 225 10 EY Services for Business and Investment in Peru
2CONSULTING STRATEGIC AND INNOVATION SERVICES Corporate Strategy and Strategic Planning Jorge Acosta We help our clients understand the transformation • Definition of a value proposition (“playbook to win”). Consulting Leader faced by their industries and the market to achieve better results, accompanying them from the design • Customer experience transformation. [email protected] of their strategy through its implementation. • Innovation strategy, building innovation platforms, We provide a personalized approach to each and accompaniment in agile tables. project with a unique experience. Our approach • Ecosystem strategy and building. • Route to market. and methodology allow us to understand their • Purpose led transformation: define and align the challenges and opportunities, in order to facilitate purpose of the organization. the achievement of tangible results that promote, optimize, and transform their company. Organizational Redesign • Alignment of organizational strategy and structure (model, roles, responsibilities, levels, positions, and FTEs). • Balanced scorecard (BSC) design and implementation. • Management and operation model redesign and optimization. • Design and drafting of corporate policies. • Design and implementation of shared service centers. • Design and implementation of family offices. Annexes 226 10 EY Services for Business and Investment in Peru
ADVANCED TECHNOLOGY SERVICES TALENT AND CHANGE MANAGEMENT CONSULTING IT Strategy Planning • Diagnosis and design of systems area management Reinforcement of leadership and talent management (governance, financial management, cost • Change plan design: agile change for transformation optimization, budges and projects, performance, projects (people, processes, organization, and/or and demand and productivity analysis). technology). • Software and vendor selection. • Design of organizational management instruments • Process automation and implementation through (regulations on organization and duties, manual RPA, machine learning, chatbots, and solution of organization and duties, employee assignment development. charts, profiles). • Diagnosis, design, implementation and support for • Design of organizational culture and change business tools and applications (ERP, CRM, SCM, BI, leadership modeling. GRC, Cloud, IoT, automation and analytics). • Develop employee value propositions: employee • Quality diagnosis, cleanup and review of data experience & employee journey map. migration process. • Analysis, design, and implementation of access roles and separation of duties (SoD). PROCESS SERVICES • Co-creation, development, and maintenance of Improvement of operational and financial end-to-end technological solutions applying agile, performance waterfall, and continuous delivery methodologies. • Design and implementation of a zero-based • Digital architectures in on-premise and cloud budget (ZBB). environments for cybersecurity management • Design organizational optimization – zero-based (maturity model, penetration testing, and organization (ZBO). ethical hacking). • Revenue assurance & improvement • APRE: Cash payment and recovery analysis. • Agile efficiency table design and implementation. • Diagnosis and optimization of business and support processes. • Cost and expense management model (ABC responsibility and cost centers). • Finance transformation. • Finance analytics
Business Transformation • Business intelligence and customer analytics. • Optimization of business contribution margin: gross2net analysis, price and discount management, promotion and trade marketing management. • Redesign of business models and improved effectiveness of the sales force. • Design and implementation of CRM models. Annexes 227 10 EY Services for Business and Investment in Peru
RISK MANAGEMENT
Corporate Governance Internal Audit • Diagnosis and implementation of good corporate • AI function design and evaluation. governance practices. • Design of annual risk-based AI plan. • Director evaluation and self-evaluation. • AI outsourcing and co-sourcing. • Assistance in improving board effectiveness. • Risk data analytics • Documentation of corporate policies and regulations. Risk Management and Internal Control • Design of risk management and internal control Supply chain management function. • Strategic sourcing management. • Alignment of risk management with business • Design of strategic vendor management models. strategy • Sales and operation planning (S&OP) design • Identification, design, assessment, and monitoring and implementation. of key risk indicators (KRIs) • Logistics optimization: Design and optimization of • COSO ERM 2017 risk framework diagnosis and networks, distribution centers, and warehouses. implementation • Inventory optimization and replenishment • Contractual risk management model design. • Diagnosis and implementation of ISO • SCM analytics. 22301-compliant business continuity management • Internet of Things (IoT) applied to plants – • Control testing digital factoring. • Adoption of and compliance with the Sarbanes Oxley Act (SOX) • Mapping and improvement of processes and controls, policies, and procedures
Compliance Management • Implementation of compliance function • Assistance in adapting to laws and regulations, such as: - Adaptation to Operational Risk Management (ORM) regulations - Personal Information Protection Act - Occupational Health and Safety Act - Act on the Determination of Essential Personnel and Minimum Services - Act for the Prevention and Punishment of Sexual Harassment Annexes 228 10 EY Services for Business and Investment in Peru
3TAX TAX SERVICES Tax Advisory David de la Torre Tax services help companies adequately comply •Constant consultancy on tax matters Tax Leader with their tax, customs, and labor obligations, minimizing their tax risks in a scenario of • Tax planning [email protected] continual, tough-to-implement statutory changes. • Advisory on audit processes • Sector taxation We assist companies in all stages of the “Fiscal • Advisory on reorganizations, mergers, etc. Life Cycle,” which ranges from the understanding and planning of operations to monitoring Tax Compliance compliance with their obligations. We also • Review of Income Tax, Value Added Tax, Temporary accompany them during the audit actions taken Net Assets Tax Returns and other tax returns related by the respective administrative authority, to other applicable taxes offering support during any litigation that • Advisory on assessment, improvement and may arise. monitoring of tax processes • Tax information report • Analysis of tax implications related to the IFRS implementation • Support in audit processes undertaken by the Tax Administration
Transfer Pricing • Compliance • Consultancy and strategic planning • Disputes
Individual Labor and Tax Advisory • Labor, tax/labor, and social security law. Topics of contracting, occupational safety and health, union relations and negotiations, and design of special compensation systems • Compliance on labor and tax/labor matters, including support for audits that the relevant authority may carry out • Taxation of individuals • Analysis and migration procedures from and to other countries • Labor inspections and labor-related judicial proceedings Annexes 229 10 EY Services for Business and Investment in Peru
EY Law International Taxation • Corporate consulting: good corporate governance, • Advisory on the incorporation of the most efficient establishment and extinction of companies and legal vehicle from a tax perspective, capitalization or branches, corporate resolutions, reorganization, and financing of operations, repatriation of currencies, general corporate consulting and efficient final supply chain management • Bank financing and stock market consulting • Advisory on the most efficient structuring of the • Legal support for Public-Private Partnerships (PPP), international businesses of economic groups state contracts, and project financing. • Identification of the most advisable jurisdictions to • Legal support in contractual matters establish holding companies or financial companies • Consulting on regulatory matters: banking and • Application of double-taxation agreements finance, stock market, energy, telecommunications. • Legal compliance: personal data, money laundering and terrorist financing prevention system, and Tax Litigation antibribery system • Contentious tax proceedings for claims with • Seed by EY: Comprehensive consulting for startups the National Superintendency of Customs and Tax Administration (SUNAT), regulatory bodies, municipalities and the Tax Court (complaints, Customs and Indirect Taxes appeals, claims and oral reports) • Consultancy on customs and customs taxation • Legal proceedings on tax matters before the Judicial (customs assessment, compliance with customs Branch (contentious-administrative proceedings, systems, tariff classification, etc). legality control proceedings) and the Constitutional • Advisory and management on customs audit Court (amparo proceedings, enforcement proceedings, performance of diagnostics and proceedings and actions against preventive reviews, as well as advisory on non- constitutional rights) contentious and contentious proceedings • Refunds and compensation proceedings • Implementation of customs advantages, planning, • Issuance of expert reports and agreed procedures to taking advantage of commercial agreements, introduce and support the defense compliance with rules of origin, customs valuation • Issuance of contingencies diagnostic reports studies, etc. • Specific design of defense strategies • Advisory on procedures for mechanisms on balances • Participation in the support of oral reports owed to the exporter, early and final refunds before the Tax Court, the Judiciary and the and recovery of VAT, as well as recovery of VAT Constitutional Court withholdings and reverse withholdings • Validation of the correct disclosure of tax • Analysis of the nature of services such as technical contingencies related to tax procedures and assistance and processes related to the certification processes in the financial statements thereof for income tax purposes in the case of non- domiciled parties Annexes 230 10 EY Services for Business and Investment in Peru
Taxes on transactions Executive Training Program • Advisory on pre-transaction structuring in order • Training on technical topics (tax, custom, legal, labor, to identify options that increase the value of and finance/accounting) and soft skills: courses for transactions: reduction of tax costs in the financing companies, individuals, and in-house courses. of the transaction • Advisory on the optimization of tax benefits in the financing of the transaction • Evaluation of the tax modeling in the projected cash flows of the transaction • Tax, customs, labor, and transfer pricing due diligence
Outsourcing Services • Accounting processing • Statutory reports • Tax compliance • Payroll processing • Personnel administration
Digital Tax • Generation and review of monthly and annual electronic books. • Automated cleanup and reconciliation processes for accounting information. • Design of analytical tools for tax, labor, and customs law compliance. • Development of systems to streamline tax compliance. • Internal control mechanisms aligned with tax administration systems. • Preparation of reports aimed at improving tax predictability and decision-making. Annexes 231 10 EY Services for Business and Investment in Peru
4STRATEGY AND STRATEGY & TRANSACTIONS SERVICES TRANSACTIONS Mergers and Acquisitions Enrique Oliveros • Valuation of the target company (buy side or Corporate Transactions and Managing Corporate Transactions and Finances sell side) Finance Leader, means making the right decisions about the way to • Advisory on the identification of targets and buyers, Investment Banking Leader strategically manage capital in a changing world, with a special emphasis on the identification of Latin America North with limited time and resources. At EY, we have a synergies that make it possible to create greater [email protected] specialized team that helps organizations evaluate added value for the transaction investment opportunities based on the Capital • Preparation of information teasers Agenda, in order to carry out efficient transactions and memorandums and achieve their strategic goals. • Management of proposal outlines and binding proposals We are able to advise you on the search for • Accompaniment in negotiation with possible buyers the right strategy for your company in merger and/or sellers and acquisition processes, the identification of • Advisory on sale agreements and the negotiation of synergies, support in financial modeling, and the terms and conditions to close the transaction measurement of the transaction implications, so that your business is more competitive, profitable, Financial Valuation and Modeling and faster growing. • Valuation of companies, business units, intangible Likewise, our EY Parthenon team has extensive assets for transactional, tax or financial processes • Fairness opinion: independent opinion on the market experience in consulting for corporate clients and value of companies and assets and/or reasonability investment funds on market studies, value creation of a proposed transaction strategies, strategic planning, and commercial due • Financial modeling: Preparation and review of diligence processes. financial models for management, financing, and transactional purposes. • Purchase price allocation: valuation of individual net assets and assignment of purchase prices as part of business combination transactions under IFRS 3 • Impairment test: Valuation of investments and cash generating units for IAS 36 compliance. Annexes 232 10 EY Services for Business and Investment in Peru
Reorganizations Working Capital Management • Liquidity and working capital optimization. • Diagnostic, design, and implementation of an • Independent assessment of business plans and integrated strategy strategic alternatives for debtors. • Quantification of opportunities for improvement in • Identification and structuring of debt/capital the three main components of working capital alternatives. • Quantification of the release of cash and increased profitability of the business • Determination of policies for suppliers and Structuring of Debt and Equity Instruments implementation of best practices for working • Consulting on fixed- and variable-income issues capital management • Financial modeling of the optimal instrument structure • Consulting on capital raising processes Operational Transaction Services (OTS) • Design of structured financing alternatives • Preparation and support in carve-out and integration (securitization of product flows) processes • Review of legal features of the transaction • Identification and realization of synergies identified • IPO readiness accompaniment • “Day One” diagnostic and “First 100 Days” plan in integration processes • Support in business continuity management Project finance and Public-Private Partnerships (PPP) • Development of feasibility studies • Preparation of financial modeling Financial, Accounting, Tax, Labor, and • Risk analysis and mitigation Legal Due Diligence • Advisory on the definition of the optimal • Development of comprehensive due diligence: financial structure financial, accounting, tax, labor, and legal • Support in negotiation with possible financiers and • Evaluation of financial statements and application contractual closure of good financial, accounting, tax, labor, and legal • Design of optimal (tax and financial) practices structuring models • EBITDA normalization analysis • Review and analysis of public and private projects • Identification of key financial factors that could impact the transaction pricing • Quantification of contingencies identified • Analysis of the calculation of price adjustments for the closure of transactions • Review of the financial model Annexes 233 10 EY Services for Business and Investment in Peru
Commercial Due Diligence Tax Structure • Performance of a pre-sale diagnostic for the • Advisory on pre-transaction structuring to identify competitive sustainability of the target's goods options that increase the transaction's value: and services reduction of tax costs and design of exit strategies • Evaluation of the stability and growth of the • Advisory on the optimization of tax benefits in the customer base financing of the transaction • Assistance in the evaluation of the competitive • Structuring of transactions for the optimization of environment, supply and demand of the company's tax benefits goods and services • Evaluation of tax modeling in the projected cash • Evaluation of key suppliers and distributors as part flows of the transaction of the target's business • Assistance in takeovers for integration and carve-out processes Strategy • Commercial due diligence • Growth strategies Operational Due Diligence • Value creation strategies • Determination of operational and IT deficiencies in • Route to market the target • Digital transformation strategy • Understanding the risks and costs of integration • Strategic planning • Identification of priority areas for an adequate • Strategic reflection planning of the integration • Identification of synergies • Understanding operational systems, including base Consumer Understanding and New Business Models software and hardware as well as applications • Value proposition (“playbook to win”) developed by in-house staff • Customer experience • Understanding processes for risk management and • Ecosystem strategy and design information security • New business model strategy and design • Market studies Annexes 234 10 EY Services for Business and Investment in Peru
CONSULTING FOR THE 5FINANCIAL INDUSTRY (FSO) José Carlos Bellina Financial Services Office Our vision guarantees the most complete value (FSO) Leader proposition in business transformation area for [email protected] the financial industry. We help align your strategy, organization, processes, and technology to achieve results that surpass your expectations.
CONSULTANCY FOR THE FINANCIAL INDUSTRY
Business transformation Business Protection • Digital transformation • Governance, risk and control • Diagnostic and design of innovation and • Internal audit and SOX growth strategies • Cyber risk management • Innovation of the experience and • Actuarial services customer relationship • Management of business continuity and • Optimization of distribution, products and channels information security • Improvement of the customer experience • Systems audit • Distribution management • Management of regulations and compliance • Integrated tests and internal control transformation
Value for the Client • Revenue assurance and improvement Financial Performance and Risks • Cost reduction and performance improvement • Treasury services and liquidity risk management • Structural reform and reform of business operating • CCAR - Capital adequacy and stress testing models and support areas • Structured finance • Improvement of the customer acquisition process • Economic regulatory capital • Claims advisory • Transformation of integrated risk management • Connecting the business with technology • Optimization of profitability and costs • Redesign of the core business • Commercial optimization • Transformation of consumer, wholesalers and capital • Credit and market risk management markets banking • Planning and improvement of the performance of • IT Transformation: Efficient integration of processes financial risks and technology • Compliance advisory • Improvement of the supply chain and suppliers • Financial, risks and reports improvement management • Regulatory reports • Advisory and transformation of policies and products • Advisory and transformation of general, life and health insurance • Business transformation (front, middle and back office) 235
ANNEXES Algeria Embassy of Peru in the People's Democratic Republic of Algeria Directory of - Address: N° 14, Rue 3, Parc Paradou - Hydra. 16016. Argel - Tel: 00 213 21 48 44 02 Peruvian 00 213 21 48 44 70 - Fax: 00 213 21 48 44 67 Embassies and - Email: [email protected] Argentina Embassy of Peru in the Republic of Argentina Consulates - Address: Av. Del Libertador 1720 (1425) Capital Federal - Buenos Aires - Tel: (0051-11) 48022000 (0051-11) 48022551 (0051-11) 48022438 (0051-11) 48016351 (0051-11) 48016429 (0051-11) 48016551 - Fax: (0054-11) 48025887 - Email: [email protected] - Website: www.embajada.pe/sites/argentina
Consular Office in Buenos Aires - Tel: (+54) 5411 43410006 - Email: [email protected]
Consular Office in Cordoba - Tel: (+54) 351 4264196 - Email: [email protected]
Consular Office in Mendoza - Tel: (+54) 261 4294926 - Email: [email protected]
Australia Embassy of Peru in Australia - Address: 40 Brisbane Avenue, Ground Floor, Barton ACT 2600, Canberra - Tel: (612) 62737351 (612) 62737352 - Fax: (612) 62737354 - Email: [email protected] - Website: www.embaperu.org.au
Photograph by © Daniel Silva / PROMPERÚ Annexes 236 10 Directory of Peruvian Embassies and Consulates
Austria Bolivia Embassy of Peru in Austria Consular Office in La Paz
- Address: Mahlerstrasse 7/22, A-1010 Viena - Tel: (+591) 2 2750568 - Tel: (00431) 713-4377 - Email: [email protected] - Fax: (00431) 712-7704 - Email: [email protected] Consular Office in Santa Cruz - Email: [email protected] Consular Office in Viena
- Tel: (+43) 1 7134377 Brazil - Email: [email protected] Embassy of Peru in the Federative Republic of Brazil
Azerbaijan - Address: S.E.S. Av. Das Nacoes lote 43 Quadra 811 CEP: 70428-900 Brasilia DF Embassy of Peru in the Republic of Azerbaijan - Tel: (55-61) 32429933 - Address: Demirchi Tower floor 24, Av. Khojaly 37, (55-61) 32429435 AZ 1010, Bakú, Azerbaijan - Fax: (55-61) 32449344 - Tel: 00+994 (12) 310 34 73 - Email: [email protected] - Email: [email protected] [email protected] Consular Office in Brasilia - Tel: (+55) 61 3242 9933 Belgium - Email: [email protected] Embassy of Peru in the Kingdom of Belgium
- Address: Av. Tervuren 212- 1150, Bruxelles Consular Office in Manaos - Tel: 00322 733 31 85 extension 20 - Tel: (+55) 92 3236 9607 00322 733 31 85 extension 18 - Email: [email protected] - Email: [email protected] - Website: www.embajadaperu.be Consular Office in Rio Branco
- Tel: (+55) 68 3 2242727 Consular Office in Bruselas - Email: [email protected] - Tel: (+32) 2 6418760 - Email: [email protected] Consular Office in Río de Janeiro
Bolivia - Tel: (+55) 21 2551 9596 (+55) 21 2551 4496 Embassy of Peru in the Plurinational State of Bolivia (+55) 21 2551 2002 - Address: Calle Fernando Guachalla Nº 300 - - Email: [email protected] Sopocachi, La Paz - Casilla: 668 - Tel: (591-2) 2441250 Consular Office in San Pablo (591-2) 2444566 - Email: [email protected] - Fax: (591-2) 2441240 - Email: [email protected] [email protected]
Consular Office in El Alto
- Email: [email protected] Annexes 237 10 Directory of Peruvian Embassies and Consulates
Canada China Embassy of Peru in Canada Embassy of Peru in the Republic of China
- Address: 130 Albert Street, Suite 1901, Ottawa, - Address: Sanlitun Bangong Lou 1-91 Beijing 100600 Ontario - K1P 5G4, Canadá - Tel: (86-10) 65323719 - Tel: +1 613- 238-1777 (86-10) 65322913 - Fax: +1 613-232-3062 - Fax: (86-10) 65322178 - Email: [email protected] - Email: [email protected] - Website: www.embassyofperu.ca [email protected] - Website: www.embperuchina.com Consular Office in Montreal Consular Office in Shanghai - Tel: (+1) 514 8445123 - Email: [email protected] - Tel: (+86) 529 85900 - Email: [email protected] Consular Office in Toronto Consular Office in Guangzhou - Tel: (+1) 416 963 9696 - Email: [email protected] - Tel: (+86) 20 66311810 - Email: [email protected] Chile Embassy of Peru in the Republic of Chile Colombia Embassy of Peru in the Republic of Colombia - Address: Av. Andrés Bello 1751 Providencia, Santiago - Casilla Postal: 16277 - Address: Calle 80 A, N° 6-50 Bogotá D.C., Colombia - Tel: (56-2) 2339-2600 - Tel: (57-1) 7462360 - Fax: (56-2) 22352053 - Fax: (57-1) 7448871 (56-2) 22358139 - Email: [email protected] - Email: [email protected] - Website: www.embajadadelperu.org.co - Website: www.embajadadelperu.cl Consular Office in Bogota Consular Office in Arica - Tel: (+57) 1 746 0295 - Tel: (+56) 58 2231020 - Email: [email protected] - Email: [email protected] Costa Rica Consular Office in Santiago Embassy of Peru in the Republic of Costa Rica
- Tel: (+56) 22860 6700 - Address: Del Mc Donald's de Plaza del Sol 500 m. - Email: [email protected] Sur y 175 m Este, Curridabat, San José, Costa Rica A.P. 4248-1000 SAN JOSE - Tel: (506) 2225-9145 (506) 2225-1314 - Fax: (506) 2253-0457 - Email: [email protected]
Consular Office in San José
- Tel: (+506) 22259145 - Email: [email protected] Annexes 238 10 Directory of Peruvian Embassies and Consulates
Cuba Ecuador Embassy of Peru in the Republic of Cuba Embassy of Peru in the Republic of Ecuador
- Address: Calle 8 Nº 307, entre 3° y 5° Miramar - - Address: Avenida República de El Salvador N34-361, La Habana, Cuba Quito - Ecuador - Tel: (53-7) 2042632 - Tel: (593-2) 2468410 - Fax: (53-7) 2042636 (593-2) 2468411 - Email: [email protected] - Fax: (593-2) 2252560 - Email: [email protected] Consular Office in La Habana - Website: www.gob.pe/embajada-del-peru-en-ecuador - Tel: (+53) 7 204 2632 Consular Office in Loja - Email: [email protected] - Tel: (+593) 7 2587330 Czech Republic - Email: [email protected] Embassy of Peru in the Czech Republic Egypt - Address: Muchova 9, Praga 6, 160 00, Embassy of Peru in the Arabic Republic of Egypt Czech Republic - Tel: (420) 224 316 210 - Address: 41 Al-Nahda Street, 2nd. Floor - Maadi, El (420) 224 315 741 Cairo - Egypt - Fax: (420) 224 314 749 - Tel: (202) 23590306 - Email: [email protected] (202) 23590406 - Website: www.peru-embajada.cz - Fax: (202) 2750-9011 - Facebook: facebook.com/embajadaperupraga - Email: [email protected]
Consular Office in Prague El Salvador
- Tel: (+420) 223 16210 Embassy of Peru in the Republic of El Salvador - Email: [email protected] - Address: Avenida Masferrer Norte, Casa Nº 17 p, Cumbres de la Escalón, Colonia Escalón - San Dominican Republic Salvador, El Salvador Embassy of Peru in la Dominican Republic - Tel: (503) 2523 9400 - Fax: (503) 25561559 - Address: Calle Las Ninfas, 18 – esquina calle Helios, - Email: [email protected] Ensanche Bella Vista, Santo Domingo, Distrito Nacional, Santo Domingo Consular Office in San Salvador - Tel: (1-809) 4823300 (1-809) 4823344 - Tel: (+503) 78 400691 - Fax: (1-809) 4823334 - Email: [email protected] - Email: [email protected]
Consular Office in Santo Domingo
- Tel: (+1) 809 482 3300 - Email: [email protected] Annexes 239 10 Directory of Peruvian Embassies and Consulates
Findland Germany Embassy of Peru in the Republic of Finland Consular Office in Hamburg
- Address: Lönnrotinkatu 7 В 11, 00120 Helsinki, - Tel: (+49) 40 4601223 Finland - Email: [email protected] - Tel: 00-358-9-759 9400 - Fax: 00-358-9-759 94040 Consular Office in Munich - Email: [email protected] - Tel: (+49) 89 13928880 - Email: [email protected] Consular Office in Helsinki Ghana - Tel: (+358) 976 000 000 - Email: [email protected] Embassy of Peru in the Republic of Ghana - Address: Nro. 25 Sir Arku Korsah Road, Airport France Residential Area, Acra, Republic of Ghana Embassy of Peru in the Republic of France PO Box: CT6753 - Tel: 00 233 303 938 177 - Address: 50, Avenue Kléber 75116, Paris 00 233 303 972 751 - Tel: (33-1) 53704200 - Email: [email protected] - Fax: (33-1) 47043255 - Email: [email protected] Consular Office in Acra - Website: www.embajada.pe/sites/francia - Tel: (+233) 237 463 912 Consular Office in Paris - Email: [email protected]
- Tel: (+33) 0 1 426 52510 Great Britain - Email: [email protected] Embassy of Peru in the United Kingdom of Great Germany Britain and Northern Ireland Embassy of Peru in the Federal Republic of Germany - Address: 52 Sloane Street London SW1X 9SP - Tel: (44-20) 72357213 - Address: Taubenstr 20, 3 piso, 10117 Berlin (44-20) 72358340 - Tel: 00 49 30 2064103 - Fax: (44-20) 72354463 - Fax: 00 49 30 20641077 - Email: [email protected] - Email: [email protected] - Website: www.peruembassy-uk.com - Website: www.gob.pe/embajada-del-peru-en-alemania Greece Consular Office in Berlin Embassy of Peru in the Hellenic Republic - Tel: (+49) 30 2291455 - Email: [email protected] - Address: Calle Koumbari 2, Tercer piso, Kolonaki CP 106 - 74, Athens, Greece Consular Office in Frankfurt - Tel: (0030-210) 7792761 - Tel: (+49) 69 1330926 - Fax: (0030-210) 7792905 - Email: [email protected] - Email: [email protected]
Consular Office in Athens
- Tel: (+30) 210 7792761 - Email: [email protected] Annexes 240 10 Directory of Peruvian Embassies and Consulates
Guatemala India Embassy of Peru in the Republic of Guatemala Embassy of Peru in the Republic of India
- Address: 13 Calle 14-24, Zona 13, Guatemala City - Address: D-2/5 Vasant Vihar, New Delhi - - Tel: (502) 2339 1060 110057 - India - Email: [email protected] - Tel: (+91) 11 46163333 - Website: www.embajadadelperu.com.gt - Fax: (+91) 11 46163301 - Email: [email protected] Holy See - Website: www.embassyperuindia.in Embassy of Peru to the Holy See Consular Office in Nueva Delhi - Address: Vía Di Porta Angelica, 63/A, 00193 Rome - Italy Tel: (+91) 11 46163333 - Tel: 0039 06 68308535 Email: [email protected] - Fax: 0039 06 6896059 - Email: [email protected] Indonesia Embassy of Peru in the Republic of Indonesia Honduras - Address: Menara Rajawali, 12th floor Ide Anak Embassy of Peru in the Republic of Honduras Agung Gde Agung Lot # 5.1 Kawasan Mega - Address: Calle París N° 3932, Lomas del Guijarro Kuningan - Jakarta Selatan 12950 Sur, Tegucigalpa - Tel: (62-21) 5761820 - Tel: (504) 2235 3888 (62-21) 5761821 (504) 2235 4888 - Fax: (62-21) 5761825 - Fax: (504) 2214598 - Email: [email protected] - Email: [email protected] [email protected]
Consular Office in Tegucigalpa Consular Office in Jakarta
- Tel: (+504) 2235 3888 - Tel: (+62) 21 576 1820 - Email: [email protected] - Email: [email protected]
Hungary Ireland Embassy of Peru in Hungary Embassy of Peru in Ireland
- Address: Calle Újpesti rakpart N° 3, 2do piso interior - Address: 46 Fitzwilliam Square West, Dublin 2 - D02 05, Código postal 1137, Budapest PY01 Dublin - Tel: 00 36 16 170 230 - Tel: 00 353 (1) 567 6951 - Email: [email protected] - Email: [email protected]
Consular Office in Budapest Consular Office in Dublin
- Tel: 00 36 16 170 230 - Tel: (+353) 8337 477 47 - Email: [email protected] - Email: [email protected] Annexes 241 10 Directory of Peruvian Embassies and Consulates
Israel Japan Embassy of Peru in State of Israel Embassy of Peru in Japan
- Address: Medinat Hayehudim, 60 Herzliya Pituach - Address: 2-3-1, Hiroo, Shibuya – ku, Tokyo 150- 46766 Tel Aviv, Israel 0012 - Tel: (972) 99706400 - Tel: (81-3) 34064243 - Fax: (972) 99568495 (81-3) 34064249 - Email: [email protected] - Fax: (81-3) 34097589 (81-3) 54670755 Consular Office in Tel Aviv - Email: [email protected] - Website: www.embajadadelperuenjapon.org - Tel: (+972) 9 9578835 - Email: [email protected] Consular Office in Tokyo
Italy - Tel: (+80) 35 793 4444 Embassy of Peru in Republic of Italy - Email: [email protected]
- Address: Vía Siacci 2/B segundo piso - 00197 Roma Consular Office in Nagoya - Tel: (39-06) 80691510 (39-06) 80691534 - Tel: (+81) 52 209 7851 - Fax: (39-06) 80691777 - Email: [email protected] - Email: [email protected] - Website: www.ambasciataperu.it Kuwait Embassy of Peru in the State of Kuwait Consular Office in Florence - Address: Al Arabiya Tower Building, 6to. Piso, - Tel: (+39) 055 2608803 Ahmed Al Jaber Street, Distrito de Sharq, Kuwait - Email: [email protected] City - Tel: (965) 22267250 Consular Office in Genova (965) 22267252 - Fax: (965) 22267251 - Email: [email protected] - Email: [email protected] Consular Office in Milán Consular Office in Kuwait - Tel: (+39) 068 848 063 - Tel: (+96) 565 860 007 - Email: [email protected] - Email: [email protected] Consular Office in Roma
- Email: [email protected]
Consular Office in Turin
- Tel: (+39) 011 581 9762 - Email: [email protected] Annexes 242 10 Directory of Peruvian Embassies and Consulates
Malaysia Netherlands Embassy of Peru in Malaysia Embassy of Peru in the Kingdom of Netherlands
- Address: Wisma Selangor Dredging, 6th Floor, South - Address: Nassauplein 4, 2585 EA, La Haya Block 142-A, Jalan Ampang 50450 Kuala Lumpur, - Tel: (31-70) 3653500 Post Box Nº 18 (31-70) 4271693 - Tel: (603) 21633034 - Fax: (0031-70) 3651929 (603) 21633035 - Email: [email protected] - Fax: (603) 21633039 - Website: www.embassyofperu.nl - Email: [email protected] [email protected] Consular Office in Amsterdam - Website: www.embperu.com.my - Tel: (+31) 206 228 580 - Email: [email protected] Consular Office in Kuala Lumpur
- Tel: (+60) 32 163 3034 New Zealand - Email: [email protected] Embassy of Peru in New Zealand
Mexico - Address: Level 5, 11 Chews Lane, Wellington 6011, New Zealand, Apartado de Correos/Casilla Postal: Embassy of Peru in the United Mexican States PO Box 2566 Wellington 6140 - Address: Paseo de la Reforma 2601, Colonia Lomas - Tel: 00 64 4 213 8943 Reforma - Delegación Miguel Hidalgo C.P. 11020 - - Email: [email protected] Mexico, D.F. - Tel: (52-55) 11052270 (Central) Consular Office in Wellington - Fax: (52-55) 11052279 Tel: (+64) 4213 8943 - Email: [email protected] Email: [email protected] - Website: www.embajadadelperu.mx Nicaragua Consular Office in Mexico Embassy of Peru in the Republic of Nicaragua - Tel: (+52) 55 520 34838 - Email: [email protected] - Address: Hospital Militar (1 Cuadra al Lago, 2 Cuadras Abajo) Casa Nº 325, Barrio Bolonia, Morocco Managua, Nicaragua - Casilla Postal: 211 - Tel: (505) 22666757 Embassy of Peru in the Kingdom of Morocco (505) 22668678 - Address: 16, Rue DiIfrane Plaza Perú - Rabat, - Fax: (505) 22668679 Morocco - Email: [email protected] - Tel: (212-537) 723236 - Website: www.peruennicaragua.com.ni (212-537) 723284 - Fax: (212-537) 702803 Consular Office in Managua - Email: [email protected] - Tel: (+505) 2266 8678 [email protected] - Email: [email protected]
Consular Office in Rabat
Email: [email protected] Annexes 243 10 Directory of Peruvian Embassies and Consulates
Norway Poland Embassy of Peru in the Kingdom of Norway Embassy of Peru in the Republic of Poland
- Address: Arbinsgate 2 4to piso - 0253 Oslo - Norway - Address: UL. Staroscinska1, M. 3-4, Varsovia, Poland - Tel: +47 21992220 - Tel: (48-22) 6468807 - Email: [email protected] (48-22) 6468806 - Website: www.peruembassy.no - Fax: (48-22) 6468617 - Email: [email protected] Consular Office in Oslo - Website: www.perupol.pl - Tel: (+47) 2199 2220 Consular Office in Warsaw - Email: [email protected] - Tel: (+48) 22 646 8807 Panama - Email: [email protected] Embassy of Peru in the Republic of Panama Portugal - Address: Calle 53 Marbella, Edificio “World Trade Embassy of Peru in the Portuguese Republic Center” Piso 12, Oficina 1203, Apartado Postal 4516, Zona 5 - Panama - Address: Av. Liberdade N° 144, 8º-Esq. 1250-146, - Tel: (507) 2699053 Lisbon (507) 2638901 - Tel: (00351) 213827470 - Fax: (507)2699196 - Fax: (00351) 213658149 - Email: [email protected] - Email: [email protected] - Website: www.gob.pe/embajada-del-peru-en-panama - Website: www.embaixadaperu.pt
Paraguay Consular Office in Lisbon
Embassy of Peru in the Republic of Paraguay - Tel: (+351) 213 827 470 - Address: Av. Molas López 985 Casi Pastor Filartiga, - Email: [email protected] Barrio Carmelitas, Asunción - Paraguay - Tel: (595-21) 607 431 Qatar (595-21) 606 460 Embassy of Peru in the State of Qatar - Fax: (595-21) 607327 - Address: Street 835, Building 42, Lejbailat – Zone - Email: [email protected] 64 P.O. Box 24062, Doha - Qatar - Tel: (974) 44915944 Consular Office in Asunción - Fax: (974) 44915940 - Tel: (+595) 981 474 660 - Email: [email protected] - Email: [email protected] Annexes 244 10 Directory of Peruvian Embassies and Consulates
Romania Singapore Embassy of Peru in the Republic of Romania Embassy of Peru in the Republic of Singapore
- Address: Calle Maior Gheorghe Sontu 10-12, Piso 3, - Address: 390, Orchard Road Nº 12-03 Palais Departamento 10, Distrito 1, Bucarest, Romania Renaissance Singapore 238871 - Tel: (0040-21) 2111819 - Tel: (65) 67388595 (0040-21) 2111816 - Fax: (65) 67388601 - Fax: (0040-21) 2111818 - Email: [email protected] - Email: [email protected] - Website: www.embassyperu.org.sg - Website: www.embajadaperu.ro Consular Office in Singapore Consular Office in Bucarest - Tel: (+65) 6738 8595 - Tel: (+40) 21 211 1819 - Email: [email protected] - Email: [email protected] South Africa Embassy of Peru in the Republic of South Africa Russia - Address: 200 Saint Patricks Street, Muckleneuk Hill, Embassy of Peru in the Russian Federation Pretoria 0083 - Address: Pasaje Obukha 6/1, Moscow 105064 - Tel: (27-12) 4401030 - Tel: (7) 495-662 -18-17 (27-12) 4401031 - Fax: (7) 495-662-18-17 EXT. 510 - Fax: (27-12) 4401054 - Email: [email protected] - Email: [email protected] [email protected] - Website: www.embperu.ru Consular Office in Pretoria - Tel: (+27) 12 4401030 Consular Office in Moscú - Email: [email protected] Tel: (+7) 495 662 1868 Email: [email protected] South Korea Embassy of Peru in the Republic of Korea Saudi Arabia - Address: 19F, Booyoung Teapyung, 55, Sejong- Embassy of Peru in the Kingdom of Saudi Arabia daero, Jung-gu, Seoul, South Korea - Address: Villa Nº 7393 Ibn Younis Al-Sadafi Street, - Tel: (82-2) 757-1735 Northern Maathar District P.O. Box 94433, Riyadh - Fax: (82-2) 757-1738 11693 Kingdom of Saudi Arabia. - E-mail: [email protected] - Tel: (+966) 11 4822474 - Web: www.embajada.pe/sites/corea/paginas/home.aspx (+966) 11 4810778 (+966) 11 4827078 Consular Office in Seoul - Fax: (+966) 11 4830474 - Tel: (+82) 2 757 1735 - Email: [email protected] - E-mail: [email protected] Annexes 245 10 Directory of Peruvian Embassies and Consulates
Spain Switzerland Embassy of Peru in the Kingdom of Spain Embassy of Peru in the Swiss Confederation
- Address: Calle Zurbano, 70, 28010, Madrid, Spain. - Address: Thunstrasse Nº 36, 3005, Berna - Tel: (34-91) 4314242 - Tel: (0041-31) 3518555 - Email: [email protected] - Fax: (41-31) 3518570 - Website: www.embajadaperu.es - Email: [email protected] - Website: www.embaperu.ch Consular Office in Barcelona Consular Office in Berna - Tel: (+34) 934 154 999 - Email: [email protected] - Tel: (+41) 313 518 555 - Email: [email protected] Consular Office in Bilbao Consular Office in Geneva - Tel: (+34) 94 6413 040 - Email: [email protected] - Tel: (+41) 22 707 4917 - Email: [email protected] Consular Office in Madrid Consular Office in Zurich - Tel: (+34) 91 5629022 - Email: [email protected] - Tel: (+41) 44 211 8211 - Email: [email protected] Consular Office in Sevilla Thailand - Tel: (+34) 95 4232819 - Email: [email protected] Embassy of Peru in the Kingdom of Thailand - Address: Glass Haus Building 16th Floor, N° 1, Consular Office in Valencia Sukhumvit 25 Road, Bangkok 10110. - Tel: (+34) 96 3524463 - Tel: +66 (0) 2 260-6243 - Email: [email protected] +66 (0) 2 260-6245 - Fax: +66-2260 6244 Sweden - Email: [email protected] Embassy of Peru in the Kingdom of Sweden - Website: www.peruthai.or.th
- Address: Kommendörsgatan 35 NB, 114 58 Trinidad and Tobago Stockholm, Sweden Embassy of Peru in the Republic of - Tel: (+46) (8) 440 87 40 Trinidad and Tobago - Fax: (+46) (8) 20 55 92 - Email: [email protected] - Address: 4 Trinidad Crescent, Federation Park, - Website: www.peruembassy.se Puerto España, Trinidad and Tobago - Tel: (1-868) 6287773 Consular Office in Stockholm (1-868) 2212939 - Email: [email protected] - Tel: (+46) 844 08740 - Email: [email protected] Consular Office in Port of Spain
- Tel: 00 1 868 628 7773 00 1 868 221 2939 - Email: [email protected] Annexes 246 10 Directory of Peruvian Embassies and Consulates
Turkey United States of America Embassy of Peru in the Republic of Turkey Consular Office in Denver
- Address: Koza Sokak No. 119. Departamento No. 7, - Tel: (+1) 303 355 8555 Gaziosmanpaşa, Ankara. Códıgo postal 06700. - Email: [email protected] - Tel: 0090 312 4481436 0090 312 4469039 Consular Office in Hartford - Fax: 0090 312 4474076 - Tel: (+1) 860 548 0266 - Email: [email protected] - Email: [email protected] [email protected] Consular Office in Houston Consular Office in Ankara - Tel: (+1) 713 355 9517 - Tel: (+90) 533 041 0885 - Email: [email protected] - Email: [email protected] Consular Office in Los Angeles United States of America - Tel: (+1) 213 988 6043 Embassy of Peru in the United States of America - Email: [email protected] - Address: 1700 Massachusetts Ave, N.W. Washington, D.C. 20036-1903 Consular Office in Nueva York - Tel: (1-202) 8339860 - Tel: (+1) 646 735 3901 (1-202) 8339869 - Email: [email protected] - Fax: (1-202) 65-98124 - Email: [email protected] Consular Office in San Francisco [email protected] - Website: www.embassyofperu.org - Tel: (+1) 415 981 7378 - Email: [email protected] Consular Office in Atlanta Consular Office in Paterson - Tel: (+1) 678 336 7010 - Email: [email protected] - Tel: (+1) 973 278 3324 - Email: [email protected] Consular Office in Boston Consular Office in Miami - Tel: (+1) 617 3382227 - Email: [email protected] - Tel: (+1) 786 713 2400 - Email: [email protected] Consular Office in Chicago
- Email: [email protected]
Consular Office in Dallas
- Tel: (+1) 972 234 0005 - Email: [email protected] Annexes 247 10 Directory of Peruvian Embassies and Consulates
Uruguay Vietnam Embassy of Peru in the Oriental Republic of Uruguay Embassy of Peru in the Socialist Republic of Vietnam
- Address: Plaza Independencia 737, Edificio la Unión - Address: Edificio CornerStone, Piso 14, N°. 16, 4th. Floor Phan Chu Trinh, Hoan Kiem, Hanoi, Vietnam - Tel: 00 598 2902 2496 - Tel: 00 84 4 393-630-82 00 598 2908 2825 - Fax: 00 84 4 393-630-81 00 598 2908 8870 - Email: [email protected] - Fax: (00598) 27077793 - Website: www.peruembassy.vn/ - Email: [email protected] - Website: www.embajada.pe/sites/uruguay Consular Office in Hanoi - Tel: (+84) 24 3936 3082 Consular Office in Montevideo - Email: [email protected] - Tel: (+598) 92 783 547 - Email: [email protected]
Venezuela Embassy of Peru in the Bolivarian Republic of Venezuela
- Address: Blandín with av. Principal de La Castellana, Building “Torre Digitel”, Floor 12, office 12B, Urb. La Castellana, Municipio Chacao, Miranda Caracas (Postal code 1060) - Tel: (58-212) 2641483 (58-212) 2641420 - Fax: (58-212) 2657592 - Email: [email protected] -Website: www.gob.pe/embajada-del-peru-en-venezuela
Consular Office in Caracas
- Tel: (+58) 212 261 9389 - Email: [email protected] 248
ANNEXES Amazonas Address: Jr. Ortiz Arrieta 1250, Chachapoyas - Amazonas Directory Tel: (041) 477185 (041) 478131 Ext. 257 of Regional Email: [email protected] Oscar Ramiro Altamirano Gobernador Regional
Governments Áncash Address: Campamento Vichay s/n, Huaraz - Áncash Tel: (043) 426520 Email: [email protected]
Juan Carlos Morillo Ulloa Gobernador Regional
Apurímac Address: Jr. Puno 107, Abancay - Apurímac Tel: (083) 322688 (083) 322170 Ext. 115 Email: [email protected]
Baltazar Lantarón Núñez Gobernador Regional
Arequipa Address: San Francisco 308 – Arequipa Tel: (054) 465246 (054) 464778 (054) 382860 Ext. 1100 - 1200 Email: [email protected]
Elmer Cáceres Llica Gobernador Regional
Ayacucho Address: Jr. Callao 122 – Ayacucho Tel: (066) 403528 Email: [email protected]
Carlos Alberto Rúa Carbajal Gobernador Regional Annexes 249 10 Directory of Regional Governments
Cajamarca Huánuco Address: Jr. Sta. Teresa Jornet 351, Urb. La Alameda Address: Calicanto 145, Amarilis - Huánuco – Cajamarca Tel: (062) 513488 Tel: (076) 599004 (062) 516113 / 512124 Ext. 191 (076) 599001 Ext. 1012 Email: [email protected] Email: [email protected] Juan Manuel Alvarado Cornelio Mesías Antonio Guevara Amasifuén Gobernador Regional Gobernador Regional Ica Provincia Constitucional del Callao Address: Av. Cutervo No. 920 – Ica Address: Av. Elmer Faucett 3970 – Callao Tel: (056) 237348 Tel: (01) 4844100 (056) 238575 Ext. 302 – 223 Email: [email protected] Email: [email protected]
Dante José Mandriotti Castro Javier Gallegos Barrientos Gobernador Regional Gobernador Regional
Cusco Junín Address: Av. Tomasa Tito Condemayta, Wanchaq - Address: Jr. Loreto 363, Centro Cívico – Huancayo Cusco Tel: (064) 602014 Tel: (084) 256579 (064) 602012 (084) 221131 Ext. 2202 (064) 602000 Ext. 1302 - Email: [email protected] Email: [email protected]
Jean Paul Benavente García Vladimir Roy Cerrón Rojas Gobernador Regional Gobernador Regional
Huancavelica La Libertad Address: Jr. Torre Tagle 336 – Huancavelica Address: Los Brillantes 650, Urb. Sta. Inés – Trujillo Tel: (067) 452883 Tel: (044) 604080 (067) 452891 Ext. 1001 – 1002 (044) 231791 Email: No registra (044) 604000 Ext. 2235 Email: [email protected] Maciste Alejandro Díaz Abad Gobernador Regional Manuel Felipe Llempén Coronel Gobernador Regional Annexes 250 10 Directory of Regional Governments
Chiclayo Moquegua Address: Calle Juan Tomis Stak, Km 4.5 de la Address: Km. 0.3 Carretera Moquegua, Toquepala - carretera Pimentel – Chiclayo Moquegua Tel: (074) 201342 Tel: (053) 462031 (074) 606090 Email: No registra (074) 606060 Ext. 1102 – 1103 Email: No registra Zenón Gregorio Cuevas Pare Gobernador Regional Anselmo Lozano Centurión Gobernador Regional Pasco Address: Edif. Estatal Nº 1 San Juan, Pampa - Lima Cerro de Pasco Address: Avda. Túpac Amaru 403-405 - Huacho Tel: (063) 597060 Ext. 2075 Tel: (01) 4145532 Email: [email protected] (01) 4145530 Ext. 5532 Email: [email protected] Pedro Ubaldo Polinar Gobernador Regional Ricardo Chavarría Oría Gobernador Regional Piura Address: Av. San Ramón s/n, Urb. San Eduardo Loreto el Chipe – Piura Address: Av. Abelardo Quiñones, Km. 1.5 – Iquitos Tel: (073) 284602 Tel: (065) 266911 (073) 284610 (065) 267358 Email: [email protected] Email: [email protected] Servando García Correa Elisbán Ochoa Sosa Gobernador Regional Gobernador Regional Puno Madre de Dios Address: Jr. Deustua 356 – Puno Address: Av. Fitzcarral 411 - Puerto Maldonado Tel: (051) 354000 Tel: (082) 571560 Email: [email protected] (082) 571199 Ext. 107 (082) 793095 Walter Aduviri Calisaya Email: [email protected] Gobernador Regional
Luis Guillermo Hidalgo Okimura San Martín Gobernador Regional Address: Ca.Aeropuerto 150, Bario de Lluyllucucha – Moyobamba Tel: (042) 563987 (042) 564100 Ext. 1010 Email: [email protected]
Pedro Bogarín Vargas Gobernador Regional Annexes 251 10 Directory of Regional Governments
Tacna Address: Hipólito Unanue 1269 – Tacna Tel: (052) 583030 Ext. 266 Email: [email protected]
Juan Tonconi Quispe Gobernador Regional
Tumbes Address: Av. La Marina 200 - Tumbes Tel: (072) 524390 Email: [email protected]
Wilmer Florentino Dios Benites Gobernador Regional
Ucayali Address: Jr. Raymondi 220 – Pucallpa Tel: (061) 586121 (061) 586120 Ext. 1001 Email: [email protected]
Francisco Antonio Pezo Torres Gobernador Regional 252
ANNEXES Peruvian - American Chamber of Commerce - AmCham (Cámara Peruano – Americana - AMCHAM) Directory of Address: Av. Víctor Andrés Belaúnde 177, San Isidro, Lima 27 Tel: +51 1 705 8000 Principal Fax: +51 1 705 8026 Email: [email protected] Website: www.amcham.org.pe
Chambers of Mariela García President Commerce Peruvian – Brazilian Binational Chamber of Commerce and Integration - CAPEBRAS (Cámara Binacional de Comercio e Integración Perú - Brasil - CAPEBRAS) Address: Calle El Rosario 359 “A”, Miraflores, Lima 18 Tel: +51 1 447 3797 Website: www.capebras.org
Miguel Vega Alvear President
Spanish Chamber of Commerce in Peru (Cámara de Comercio de España en el Perú) Address: Av. República de Panama 3591, Of. 301, San Isidro, Lima 27 Tel: +51 1 399 4730 Email: [email protected] Website: https://cocep.org.pe/
Alberto Almendres Sánchez President
Peruvian – Chilean Chamber of Commerce (Cámara de Comercio Peruano - Chilena) Address: Calle Monterrey 281, Of. 214, Urb. Chacarilla, Santiago de Surco, Lima 33 Tel: +51 1 372 2553 +51 1 372 4858 Website: www.camaraperuchile.org
Juan Carlos Fisher Tudela President Annexes 253 10 Directory of Principal Chambers of Commerce
Canadian – Peruvian Chamber of Commerce Italian Chamber of Commerce in Peru (Câmara de Comercio Canada - Peru) (Cámara de Comercio Italiana del Perú) Address: Calle Jose Galvez 692, Of. 402, Miraflores, Address: Pasaje Rospigliosi 105, Barranco Lima 18 Tel: +51 1 444 1997 Tel: +51 1 440 6698 +51 1 444 2016 Email: [email protected] Email: [email protected] Website: www.canadaperu.org Website: www.cameritpe.com
Jorge León Benavides Tiziana Marini President President
Peruvian – Ecuadorian Business Council Peruvian – Argentine Chamber of Commerce (Consejo Empresarial Peruano – Ecuatoriana) (Cámara de Comercio Peruano - Argentina) Address: Av. Salaverry 2415, Of. 305, II block, Address: Av. Camino Real 479, Of. 301B, San Isidro, San Isidro, Lima 27 Lima 27 Tel: +51 1 222 1772 Tel: +51 1 441 4001 Email: [email protected] Fax: +51 1 440 1093 Website: www.capecua.org.pe Email: [email protected]
Juan Carlos Durand Grahammer Jose María Allonca President President
Peruvian – German Chamber of Commerce Peruvian – British Chamber of Commerce and Industry (Cámara de Comercio Peruano Británica) (Cámara de Comercio e Industria Peruano – Alemana) Address: Av. José Larco 1301, piso 22, Address: Av. Camino Real 348, Of.1502, San Isidro Torre Parque Mar, Miraflores, Lima 18 Tel: +51 1 441 8616 Tel: +51 1 617 3090 +51 1 442 6014 Fax: +51 1 617 3090 Website: www.camara-alemana.org.pe Email: [email protected] Website: bpcc.org.pe Bernd Schmidt President Enrique Anderson President Peruvian – French Chamber of Commerce and Industry Peruvian – Mexican Chamber of Commerce (Cámara de Comercio e Industria Peruano – Francesa) (Cámara de Comercio Peruano - Mexicana) Address: Los Nogales 326, San Isidro Address: Montebello 170, Urb. Chacarilla, Santiago Tel: +51 1 421 4050 de Surco, Lima 33 +51 1 421 9093 Tel: +51 1 627 5568 Website: www.ccipf.com Fax: +51 1 628 8650 Website: ccpm.org.pe Ricardo Guevara Bringas President Gerardo Solís Macedo President Annexes 254 10 Directory of Principal Chambers of Commerce
Swiss Chamber of Commerce in Peru Peruvian – Japanese Chamber of Commerce (Cámara de Comercio Suiza en el Perú) and Industry Address: Av. Salaverry 3240, piso 4, San Isidro, Lima (Cámara de Comercio e Industria Peruano - Japonesa) 27 Address: Av. Gregorio Escobedo 803, piso 7, Tel: +51 1 264 3516 Jesús María, Lima 11 Fax: +51 1 264 3526 Tel: +51 1 261 0484 Email: [email protected] Fax: +51 1 261 3992 Website: www.swisschamperu.org Website: www.apj.org.pe
Felipe Antonio Custer Keisuke Tanaka President President
Peruvian – Chinese Chamber of Commerce Peruvian – Nordic Chamber of Commerce (Cámara de Comercio Peruano-China) (Cámara de Comercio Peruano - Nórdica ) Address: Calle Francisco Masías 544, piso 6, Address: Av. La Encalada 1010, Of. 204, Santiago de San Isidro, Lima 27 Surco, Lima 33 Tel: +51 1 422 8152 Tel: +51 1 437 6393 Fax: +51 1 422 8358 Email: [email protected] Email: [email protected] [email protected] Website: www.capechi.org.pe Website: www.camaranordica.org.pe
José Tam Pérez Raúl Alta-Torre President President
Attaché Office of the Embassy of Colombia – Peruvian – Irish Chamber of Commerce PROCOLOMBIA (Cámara de Comercio Peruano - Irlandesa) (Agregaduría Comercial de la Embajada de Colombia – Address: Av. Paseo de la República 5757-B, PROCOLOMBIA) Urb. San Antonio, Miraflores Address: Av. Alfredo Benavides 1555, Of. 506, Tel: +51 1 242 9516 Miraflores, Lima 18 Email: [email protected] Tel: +51 1 242 7207 Website: www.ipcc.org.pe Fax: +51 1 222 2074 Email: [email protected] Patrick A. Stenning Website: www.proexport.com President
María del Pilar Lozano Ramírez Peruvian – Arab Chamber of Commerce Directora (Cámara de Comercio Árabe - Peruana) Address: Av. Paseo de la República 5757-B, Urb. San Antonio, Miraflores Tel: +51 1 242 9516 Email: [email protected] Website: ccap.org.pe
Hamed Abou Zahr President Annexes 255 10 Directory of Principal Chambers of Commerce
Chamber of Commerce of India in Peru Peruvian – Colombian Chamber of Commerce (Cámara de Comercio de la India en Perú) and Integration Address: Calle Clemente X 483, San Isidro (Cámara de Comercio e Integración Colombo Peruana) Tel: + 51 1 717 4607 Address: Alcanfores 1140, Miraflores, Lima, Peru Email: [email protected] Tel: +51 1 242 4530 Website: www.inchamperu.com Email. [email protected] Website: www.colperu.com Rohit Rao President Hernando Otero García President Peruvian-Romanian Chamber of Commerce (Cámara de Comercio Peruano-Rumana) Peruvian – Israeli Chamber of Commerce Address: Calle Porta 170, Piso 9, Of. 905, Miraflores (Cámara de Comercio Peruano – Israelí) Tel: +51 1 725 5888 Address: Av. Dos de Mayo 1815 San Isidro - Lima 27 Email: [email protected] Telefax: 222 8850 Website: www.camaraperuromania.com Mizrahi Yossef Haim Eduardo Samaniego Soto President President 5 Taxes 256
Acknowledgments
This publication was prepared by:
Alejandro Prieto Ana Cecilia Gervasi Carla Rizo-Patrón Carlos Aspiros (design and layout) Diego Moschella Eduardo Chávarri Fernando Tori Giancarlo Riva José Miguel Nieto Karin Fernandini María del Carmen Pizarro María del Pilar Sabogal Mario Zúñiga Martín Aliaga Mauro Ugaz Milagros Rasmussen Miya Mishima Nadia Malpartida Nathalie Gambini Paulo Pantigoso Rafael Ugaz Ricardo Leiva Sonia Rengifo Vanessa Barzola Walter Álvarez Statement
This publication contains summarized information and is therefore intended solely as a general reference guide for facilitating access to information related to potential business. It is not intended, under any circumstances, to be used as a substitute for detailed research or the exercise of professional criteria and judgment. Additionally, the constant changes in the markets and their resulting information may result in the need to update the information included in this document. EY accepts no responsibility for the economic results that any person, company, or business may attempt to attribute to any material in this publication. For all specific business or investment matters, advice should always be sought from a qualified advisor. 5 TaxesEY | Assurance | Consulting | Tax | Strategy & Transactions 258
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